ITAT Ahmedabad Judgments — February 2023

The Tribunal held that the addition of Rs. 12,55,00,000/- on account of unsecured loans for AY 2009-10 was not justified. The assessment order for AY 2009-10 was passed under Section 143(3) on November 30, 2011, which was prior to the search conducted on December 4, 2014. Since the assessment for AY 2009-10 had concluded before the search, and no incriminating material was found during the search proceedings in respect of the unsecured loans received during that year, the AO could not disturb the concluded assessment to make additions under Section 68. The Tribunal found that the assessee's case was covered by the binding judgments of higher authorities, including CIT vs. Saumya Construction Pvt Ltd, Rohini Builders v/s CIT, and various High Court decisions. The Tribunal also noted that for loans from Rajshah Enterprise Pvt. Ltd. and Labdhi Finance, the identity of the parties was established, and their assessment details were available to the AO. The Tribunal deleted the additions made by the AO. The Tribunal did not explicitly address Revenue's Grounds 4 and 5 separately, but the deletion of the addition implicitly addressed the underlying issues.

The Tribunal held that the Assessing Officer lacked the jurisdiction to initiate proceedings under Section 153C of the Income Tax Act, 1961, against the assessee. The search in the case of Shri Sanket Jitendrabhai Shah was conducted on 04.12.2014, prior to the amendment of Section 153C which came into effect from 01.06.2015. Under the pre-amended Section 153C, the seized material had to "belong or belong to" the assessee for the AO to assume jurisdiction. The Tribunal noted that the satisfaction note recorded by the AO indicated that the seized material "pertain or relates to the assessee," not that it "belonged to" the assessee. The Tribunal relied on the jurisdictional judgments of the Hon'ble Gujarat High Court, which consistently held that the amended provisions of Section 153C apply prospectively to searches conducted on or after 01.06.2015. Therefore, for searches conducted before this date, the pre-amended provisions apply, and the jurisdictional requirement of the seized material belonging to the assessee was not met. Consequently, the assessments made invoking the amended provisions of Section 153C were legally not tenable, and the additions were liable to be deleted. The Tribunal also noted that the CIT(A) had deleted the additions on similar grounds.

The Tribunal held that the Assessing Officer lacked the jurisdiction to initiate proceedings under Section 153C of the Income Tax Act, 1961, against the assessee. The search in the case of Shri Sanket Jitendrabhai Shah was conducted on 04.12.2014, prior to the amendment of Section 153C which came into effect from 01.06.2015. Under the pre-amended Section 153C, the seized material had to "belong or belong to" the assessee for the AO to assume jurisdiction. The Tribunal noted that the satisfaction note recorded by the AO indicated that the seized material "pertain or relates to the assessee," not that it "belonged to" the assessee. The Tribunal relied on the jurisdictional judgments of the Hon'ble Gujarat High Court, which consistently held that the amended provisions of Section 153C apply prospectively to searches conducted on or after 01.06.2015. Therefore, for searches conducted before this date, the pre-amended provisions apply, and the jurisdictional requirement of the seized material belonging to the assessee was not met. Consequently, the assessments made invoking the amended provisions of Section 153C were legally not tenable, and the additions were liable to be deleted. The Tribunal also noted that the CIT(A) had deleted the additions on similar grounds.

The Tribunal held that the Assessing Officer lacked the jurisdiction to initiate proceedings under Section 153C of the Income Tax Act, 1961, against the assessee. The search in the case of Shri Sanket Jitendrabhai Shah was conducted on 04.12.2014, prior to the amendment of Section 153C which came into effect from 01.06.2015. Under the pre-amended Section 153C, the seized material had to "belong or belong to" the assessee for the AO to assume jurisdiction. The Tribunal noted that the satisfaction note recorded by the AO indicated that the seized material "pertain or relates to the assessee," not that it "belonged to" the assessee. The Tribunal relied on the jurisdictional judgments of the Hon'ble Gujarat High Court, which consistently held that the amended provisions of Section 153C apply prospectively to searches conducted on or after 01.06.2015. Therefore, for searches conducted before this date, the pre-amended provisions apply, and the jurisdictional requirement of the seized material belonging to the assessee was not met. Consequently, the assessments made invoking the amended provisions of Section 153C were legally not tenable, and the additions were liable to be deleted. The Tribunal also noted that the CIT(A) had deleted the additions on similar grounds.

The Tribunal held that the addition of Rs. 12,55,00,000/- on account of unsecured loans for AY 2009-10 was not justified. The assessment order for AY 2009-10 was passed under Section 143(3) on November 30, 2011, which was prior to the search conducted on December 4, 2014. Since the assessment for AY 2009-10 had concluded before the search, and no incriminating material was found during the search proceedings in respect of the unsecured loans received during that year, the AO could not disturb the concluded assessment to make additions under Section 68. The Tribunal found that the assessee's case was covered by the binding judgments of higher authorities, including CIT vs. Saumya Construction Pvt Ltd, Rohini Builders v/s CIT, and various High Court decisions. The Tribunal also noted that for loans from Rajshah Enterprise Pvt. Ltd. and Labdhi Finance, the identity of the parties was established, and their assessment details were available to the AO. The Tribunal deleted the additions made by the AO. The Tribunal did not explicitly address Revenue's Grounds 4 and 5 separately, but the deletion of the addition implicitly addressed the underlying issues.

The Tribunal held that the addition of Rs. 12,55,00,000/- on account of unsecured loans for AY 2009-10 was not justified. The assessment order for AY 2009-10 was passed under Section 143(3) on November 30, 2011, which was prior to the search conducted on December 4, 2014. Since the assessment for AY 2009-10 had concluded before the search, and no incriminating material was found during the search proceedings in respect of the unsecured loans received during that year, the AO could not disturb the concluded assessment to make additions under Section 68. The Tribunal found that the assessee's case was covered by the binding judgments of higher authorities, including CIT vs. Saumya Construction Pvt Ltd, Rohini Builders v/s CIT, and various High Court decisions. The Tribunal also noted that for loans from Rajshah Enterprise Pvt. Ltd. and Labdhi Finance, the identity of the parties was established, and their assessment details were available to the AO. The Tribunal deleted the additions made by the AO. The Tribunal did not explicitly address Revenue's Grounds 4 and 5 separately, but the deletion of the addition implicitly addressed the underlying issues.

The Tribunal held that the appeals concerning the validity of Section 153C proceedings for AY 2011-12 to 2015-16 were rendered infructuous. This was because the additions made by the AO on merits were deleted by the CIT(A) for AY 2012-13 to 2014-15, and the Revenue's appeals against these deletions were dismissed by the ITAT. For AY 2015-16, the addition of Rs. 12,00,000/- was deleted by the CIT(A) on merits, and the Revenue did not appeal. Therefore, the assessee had succeeded on merits, making the technical ground of challenge to Section 153C proceedings moot. Regarding the addition of Rs. 2,52,100/- under Section 69B for AY 2011-12, the Tribunal noted that the CIT(A) had partly allowed the appeal, deleting a significant portion of the addition. The judgment does not explicitly detail the Tribunal's finding on the remaining Rs. 2,52,100/- or the specific reasoning for the partial allowance by the CIT(A) in this context, but it implies the assessee's appeal on this point was partly allowed. The assessment under Section 144 for AY 2015-16 was also dismissed as infructuous because the addition was deleted by the CIT(A) on merits and the Revenue did not appeal. The Revenue's appeals for AY 2011-12 to 2013-14 were dismissed.

The Tribunal held that the appeals concerning the validity of Section 153C proceedings for AY 2011-12 to 2015-16 were rendered infructuous. This was because the additions made by the AO on merits were deleted by the CIT(A) for AY 2012-13 to 2014-15, and the Revenue's appeals against these deletions were dismissed by the ITAT. For AY 2015-16, the addition of Rs. 12,00,000/- was deleted by the CIT(A) on merits, and the Revenue did not appeal. Therefore, the assessee had succeeded on merits, making the technical ground of challenge to Section 153C proceedings moot. Regarding the addition of Rs. 2,52,100/- under Section 69B for AY 2011-12, the Tribunal noted that the CIT(A) had partly allowed the appeal, deleting a significant portion of the addition. The judgment does not explicitly detail the Tribunal's finding on the remaining Rs. 2,52,100/- or the specific reasoning for the partial allowance by the CIT(A) in this context, but it implies the assessee's appeal on this point was partly allowed. The assessment under Section 144 for AY 2015-16 was also dismissed as infructuous because the addition was deleted by the CIT(A) on merits and the Revenue did not appeal. The Revenue's appeals for AY 2011-12 to 2013-14 were dismissed.

The Tribunal held that the appeals concerning the validity of Section 153C proceedings for AY 2011-12 to 2015-16 were rendered infructuous. This was because the additions made by the AO on merits were deleted by the CIT(A) for AY 2012-13 to 2014-15, and the Revenue's appeals against these deletions were dismissed by the ITAT. For AY 2015-16, the addition of Rs. 12,00,000/- was deleted by the CIT(A) on merits, and the Revenue did not appeal. Therefore, the assessee had succeeded on merits, making the technical ground of challenge to Section 153C proceedings moot. Regarding the addition of Rs. 2,52,100/- under Section 69B for AY 2011-12, the Tribunal noted that the CIT(A) had partly allowed the appeal, deleting a significant portion of the addition. The judgment does not explicitly detail the Tribunal's finding on the remaining Rs. 2,52,100/- or the specific reasoning for the partial allowance by the CIT(A) in this context, but it implies the assessee's appeal on this point was partly allowed. The assessment under Section 144 for AY 2015-16 was also dismissed as infructuous because the addition was deleted by the CIT(A) on merits and the Revenue did not appeal. The Revenue's appeals for AY 2011-12 to 2013-14 were dismissed.

The Tribunal held that the appeals concerning the validity of Section 153C proceedings for AY 2011-12 to 2015-16 were rendered infructuous. This was because the additions made by the AO on merits were deleted by the CIT(A) for AY 2012-13 to 2014-15, and the Revenue's appeals against these deletions were dismissed by the ITAT. For AY 2015-16, the addition of Rs. 12,00,000/- was deleted by the CIT(A) on merits, and the Revenue did not appeal. Therefore, the assessee had succeeded on merits, making the technical ground of challenge to Section 153C proceedings moot. Regarding the addition of Rs. 2,52,100/- under Section 69B for AY 2011-12, the Tribunal noted that the CIT(A) had partly allowed the appeal, deleting a significant portion of the addition. The judgment does not explicitly detail the Tribunal's finding on the remaining Rs. 2,52,100/- or the specific reasoning for the partial allowance by the CIT(A) in this context, but it implies the assessee's appeal on this point was partly allowed. The assessment under Section 144 for AY 2015-16 was also dismissed as infructuous because the addition was deleted by the CIT(A) on merits and the Revenue did not appeal. The Revenue's appeals for AY 2011-12 to 2013-14 were dismissed.

The Tribunal held that the appeals concerning the validity of Section 153C proceedings for AY 2011-12 to 2015-16 were rendered infructuous. This was because the additions made by the AO on merits were deleted by the CIT(A) for AY 2012-13 to 2014-15, and the Revenue's appeals against these deletions were dismissed by the ITAT. For AY 2015-16, the addition of Rs. 12,00,000/- was deleted by the CIT(A) on merits, and the Revenue did not appeal. Therefore, the assessee had succeeded on merits, making the technical ground of challenge to Section 153C proceedings moot. Regarding the addition of Rs. 2,52,100/- under Section 69B for AY 2011-12, the Tribunal noted that the CIT(A) had partly allowed the appeal, deleting a significant portion of the addition. The judgment does not explicitly detail the Tribunal's finding on the remaining Rs. 2,52,100/- or the specific reasoning for the partial allowance by the CIT(A) in this context, but it implies the assessee's appeal on this point was partly allowed. The assessment under Section 144 for AY 2015-16 was also dismissed as infructuous because the addition was deleted by the CIT(A) on merits and the Revenue did not appeal. The Revenue's appeals for AY 2011-12 to 2013-14 were dismissed.

The Tribunal held that the Assessing Officer lacked the jurisdiction to initiate proceedings under Section 153C of the Income Tax Act, 1961, against the assessee. The search in the case of Shri Sanket Jitendrabhai Shah was conducted on 04.12.2014, prior to the amendment of Section 153C which came into effect from 01.06.2015. Under the pre-amended Section 153C, the seized material had to "belong or belong to" the assessee for the AO to assume jurisdiction. The Tribunal noted that the satisfaction note recorded by the AO indicated that the seized material "pertain or relates to the assessee," not that it "belonged to" the assessee. The Tribunal relied on the jurisdictional judgments of the Hon'ble Gujarat High Court, which consistently held that the amended provisions of Section 153C apply prospectively to searches conducted on or after 01.06.2015. Therefore, for searches conducted before this date, the pre-amended provisions apply, and the jurisdictional requirement of the seized material belonging to the assessee was not met. Consequently, the assessments made invoking the amended provisions of Section 153C were legally not tenable, and the additions were liable to be deleted. The Tribunal also noted that the CIT(A) had deleted the additions on similar grounds.

The Tribunal held that the addition of Rs. 12,55,00,000/- on account of unsecured loans for AY 2009-10 was not justified. The assessment order for AY 2009-10 was passed under Section 143(3) on November 30, 2011, which was prior to the search conducted on December 4, 2014. Since the assessment for AY 2009-10 had concluded before the search, and no incriminating material was found during the search proceedings in respect of the unsecured loans received during that year, the AO could not disturb the concluded assessment to make additions under Section 68. The Tribunal found that the assessee's case was covered by the binding judgments of higher authorities, including CIT vs. Saumya Construction Pvt Ltd, Rohini Builders v/s CIT, and various High Court decisions. The Tribunal also noted that for loans from Rajshah Enterprise Pvt. Ltd. and Labdhi Finance, the identity of the parties was established, and their assessment details were available to the AO. The Tribunal deleted the additions made by the AO. The Tribunal did not explicitly address Revenue's Grounds 4 and 5 separately, but the deletion of the addition implicitly addressed the underlying issues.

The Tribunal held that the addition of Rs. 12,55,00,000/- on account of unsecured loans for AY 2009-10 was not justified. The assessment order for AY 2009-10 was passed under Section 143(3) on November 30, 2011, which was prior to the search conducted on December 4, 2014. Since the assessment for AY 2009-10 had concluded before the search, and no incriminating material was found during the search proceedings in respect of the unsecured loans received during that year, the AO could not disturb the concluded assessment to make additions under Section 68. The Tribunal found that the assessee's case was covered by the binding judgments of higher authorities, including CIT vs. Saumya Construction Pvt Ltd, Rohini Builders v/s CIT, and various High Court decisions. The Tribunal also noted that for loans from Rajshah Enterprise Pvt. Ltd. and Labdhi Finance, the identity of the parties was established, and their assessment details were available to the AO. The Tribunal deleted the additions made by the AO. The Tribunal did not explicitly address Revenue's Grounds 4 and 5 separately, but the deletion of the addition implicitly addressed the underlying issues.

The Tribunal held that the addition of Rs. 12,55,00,000/- on account of unsecured loans for AY 2009-10 was not justified. The assessment order for AY 2009-10 was passed under Section 143(3) on November 30, 2011, which was prior to the search conducted on December 4, 2014. Since the assessment for AY 2009-10 had concluded before the search, and no incriminating material was found during the search proceedings in respect of the unsecured loans received during that year, the AO could not disturb the concluded assessment to make additions under Section 68. The Tribunal found that the assessee's case was covered by the binding judgments of higher authorities, including CIT vs. Saumya Construction Pvt Ltd, Rohini Builders v/s CIT, and various High Court decisions. The Tribunal also noted that for loans from Rajshah Enterprise Pvt. Ltd. and Labdhi Finance, the identity of the parties was established, and their assessment details were available to the AO. The Tribunal deleted the additions made by the AO. The Tribunal did not explicitly address Revenue's Grounds 4 and 5 separately, but the deletion of the addition implicitly addressed the underlying issues.

The Tribunal decided the issues by referring to its previous decisions on identical grounds in other appeals. For the disallowance under Section 14A (AY 2008-09), the Tribunal noted that the AO had accepted the assessee's factual position that no direct expenditure was incurred for investments yielding exempt income, and that investments were made from own funds. The CIT(A) had deleted the addition, and the Tribunal found no justification to interfere. For the disallowance under Section 35D (preliminary expenses), the Tribunal referred to its prior ruling where the issue was decided in favour of the assessee, rejecting the Revenue's ground. Similarly, for the deduction under Section 80IA(4), the Tribunal relied on its earlier decision where the issue was decided in favour of the assessee, rejecting the Revenue's grounds. For ESOPs, the Tribunal also referred to its prior decision where the issue was decided in favour of the assessee. Consequently, the appeals filed by the Revenue were largely dismissed, with some appeals being partly allowed due to cross-objections filed by the assessee. The Tribunal did not expressly leave any issue undecided.

The Tribunal decided the issues by referring to its previous decisions on identical grounds in other appeals. For the disallowance under Section 14A (AY 2008-09), the Tribunal noted that the AO had accepted the assessee's factual position that no direct expenditure was incurred for investments yielding exempt income, and that investments were made from own funds. The CIT(A) had deleted the addition, and the Tribunal found no justification to interfere. For the disallowance under Section 35D (preliminary expenses), the Tribunal referred to its prior ruling where the issue was decided in favour of the assessee, rejecting the Revenue's ground. Similarly, for the deduction under Section 80IA(4), the Tribunal relied on its earlier decision where the issue was decided in favour of the assessee, rejecting the Revenue's grounds. For ESOPs, the Tribunal also referred to its prior decision where the issue was decided in favour of the assessee. Consequently, the appeals filed by the Revenue were largely dismissed, with some appeals being partly allowed due to cross-objections filed by the assessee. The Tribunal did not expressly leave any issue undecided.

The Tribunal decided the issues by referring to its previous decisions on identical grounds in other appeals. For the disallowance under Section 14A (AY 2008-09), the Tribunal noted that the AO had accepted the assessee's factual position that no direct expenditure was incurred for investments yielding exempt income, and that investments were made from own funds. The CIT(A) had deleted the addition, and the Tribunal found no justification to interfere. For the disallowance under Section 35D (preliminary expenses), the Tribunal referred to its prior ruling where the issue was decided in favour of the assessee, rejecting the Revenue's ground. Similarly, for the deduction under Section 80IA(4), the Tribunal relied on its earlier decision where the issue was decided in favour of the assessee, rejecting the Revenue's grounds. For ESOPs, the Tribunal also referred to its prior decision where the issue was decided in favour of the assessee. Consequently, the appeals filed by the Revenue were largely dismissed, with some appeals being partly allowed due to cross-objections filed by the assessee. The Tribunal did not expressly leave any issue undecided.

The Tribunal held that the assessment for the year under consideration (AY 2011-12) was unabated as it had become final before the search took place, the time limit for issuing a notice under Section 143(2) having expired on September 30, 2012. It is a settled position of law that in the case of an unabated assessment made under Section 153A, no addition can be made dehors the material found during the search. The Tribunal noted that the CIT(A) had specifically found that no incriminating material was discovered during the search that formed the basis of the additions made in respect of the already concluded assessment. Therefore, the Tribunal agreed with the CIT(A) that the additions made by the AO were not permissible as they were not based on any incriminating material found during the search. The Tribunal dismissed the appeal of the Department, upholding the deletion of additions made by the CIT(A).

The Tribunal held that the Revenue had not challenged the finding that the addition had already been confirmed/admitted in the hands of Mr. Sanjay H. Thakkar, as evidenced by the ITSC order. Therefore, once the sum had already been subjected to tax in the hands of Mr. Thakkar, the Tribunal found no infirmity in the CIT(A)'s order deleting the addition in the hands of the assessee company. The Departmental Representative had not disputed that the same amount had already been taxed in Mr. Thakkar's hands. The Tribunal found no reason to interfere with the CIT(A)'s order. The CIT(A) had deleted the addition of Rs. 3,00,00,000/- based on the fact that Mr. Sanjay Thakkar had offered this amount as additional income, which was accepted by the ITSC. The ratio decidendi is that income already taxed in the hands of one person, based on a settlement accepted by the ITSC, cannot be taxed again in the hands of another entity, especially when the Revenue does not dispute this fact.

The Tribunal held that in the absence of any incriminating material unearthed during the course of search, no addition could be made to income that had already been assessed. It was an admitted position that the assessment years in question had already been completed on the date of the search, meaning the assessment proceedings were not abated. The Tribunal found no reference to any incriminating material in the Assessing Officer's order. The Ld. CIT(A) had correctly granted relief by deleting the additions, observing that the additions were based on entries in books of accounts, AIR/ITS information, and estimations, rather than any incriminating documents found during the search. Therefore, the additions made under Section 153A were not justified. The ratio decidendi is that for unabated assessments under Section 153A, additions can only be made if based on incriminating material found during search; otherwise, regular assessment principles apply. The appeals filed by the Revenue were dismissed.

The Tribunal held that in the absence of any incriminating material unearthed during the course of search, no addition could be made to income that had already been assessed. It was an admitted position that the assessment years in question had already been completed on the date of the search, meaning the assessment proceedings were not abated. The Tribunal found no reference to any incriminating material in the Assessing Officer's order. The Ld. CIT(A) had correctly granted relief by deleting the additions, observing that the additions were based on entries in books of accounts, AIR/ITS information, and estimations, rather than any incriminating documents found during the search. Therefore, the additions made under Section 153A were not justified. The ratio decidendi is that for unabated assessments under Section 153A, additions can only be made if based on incriminating material found during search; otherwise, regular assessment principles apply. The appeals filed by the Revenue were dismissed.

The Tribunal held that the issue was squarely covered by the judgment of the jurisdictional High Court in Anilkumar Gopikishan Agarwal vs. ACIT. The Tribunal noted that the AO had not recorded a finding that the seized documents 'belonged to' the assessee. The AO of the searched person (Shri Anil Hiralal Shah) had not given any finding that the documents seized 'belonged to' the appellant while recording satisfaction. Instead, the AO of the appellant had concluded that the seized documents 'pertain/relate to' the appellant. The Hon'ble Gujarat High Court in Anilkumar Gopikishan Agrawal and others vs. ACIT held that notices under section 153C issued based on seized documents not belonging to a third party are invalid for searches initiated before 01.06.2015, as the amendment to the section is prospective. The Tribunal further relied on the Gujarat High Court's decision in PCIT-3 vs Himanshu Chandulal Patel, which stated that there must be cogent material for the AO to be satisfied that seized documents belong to someone other than the searched person, and surmise cannot substitute satisfaction. Since no such finding was made, the initiation of proceedings under section 153C was without jurisdiction and invalid. Consequently, the assessment based on such notice was annulled. The CIT(A)'s deletion of the addition was upheld.