2020 (7) TMI 152 - AT - Income Tax

Validity of assessment u/s 153A - Presumption of the documents seizued u/s 292C - assumption of jurisdiction by the A.O under Sec. 153C - pre-mended Sec. 153C applicability - whether A.O had wrongly assumed jurisdiction under Sec. 153C of the Act, despite the fact that no money, bullion, jewellery or other valuable article or thing or any books of accounts or documents belonging to the assessee were seized during the course of the search proceedings conducted - scope of amendment to section - HELD THAT - It is the date of search that has to be considered to be the relevant date for the purpose of applying the amended provisions of Sec. 153C(1) of the Act. As such, in the case before us as the search proceedings were conducted on Cosmos group on 24.09.2014, therefore, the provisions of pre-amended Sec. 153C (i.e prior to amendment w.e.f 01.06.2015) would be applicable. On the basis of our aforesaid observations, we vacate the view taken by the CIT(A) to the contrary that the post-amended Sec. 153C would applicable in the present case. Document was seized during the course of the search proceedings from the premises of Cosmos group, therefore, as per Sec. 132(4A)(i) and Sec. 292C(1)(i) of the Act, the normal presumption would be that the said document belonged to the said searched person i.e Cosmos group. Nothing is discernible from the satisfaction note as to how the aforesaid presumption was rebutted by the A.O, and on what basis the seized document which was generated, created, maintained and retrieved from the e-mail account of the assessee, from its office premises, was held by the A.O as belonging to the assessee and not the searched person i.e Cosmos group. CIT(A) while dismissing the appeal of the assessee had proceeded on the fact that the seized document viz. jewels wrkng up to 31.08.2014.xls related to the assessee, and therefore the assumption of jurisdiction by the A.O as per the post-amended Sec. 153C (i.e as applicable w.e.f 01.06.2015), was valid and legal. As observed by us hereinabove, the revenue has accepted the aforesaid observations of the CIT(A). Now, when we have concluded that the assumption of jurisdiction in the case of the assessee before us has to be looked into as per the pre-mended Sec. 153C (i.e applicable prior to 01.06.2015), therefore, the aforesaid view so taken by the CIT(A) cannot be sustained and is liable to be vacated. At the same time, as the seized document jewels wrkng up to 31.08.2014.xls admittedly does not belong to the assessee, therefore, the jurisdictional requirement to justify the assumption of jurisdiction under the pre-amended Section 153C of the Act (i.e prior to 01.06.2015) is not found to have been satisfied. In the backdrop of our aforesaid observations, the assumption of jurisdiction by the A.O under Sec. 153C is vacated for want of jurisdiction.- Decided in favour of assessee. Order being pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown - HELD THAT - Taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. See case of DCIT vs. JSW Limited 2020 (5) TMI 359 - ITAT MUMBAI

Issues Involved:
1. Validity of jurisdiction assumed under Section 153C of the Income Tax Act, 1961.
2. Treatment of the statement of Shri. Suraj Parmar as a document belonging to the appellant.
3. Rejection of grounds related to non-provision of backup/soft copy of unaccounted tally data and violation of principles of natural justice.
4. Addition of ?1,74,99,600/- and ?6,55,64,120/- on account of alleged on-money received from Suraj Parmar or Cosmos Group for A.Y 2013-14 and A.Y 2014-15 respectively.

Detailed Analysis:

1. Validity of Jurisdiction Assumed Under Section 153C:
The primary issue revolved around whether the Assessing Officer (A.O) rightly assumed jurisdiction under Section 153C of the Income Tax Act, 1961. The appellant argued that no money, bullion, jewellery, or documents belonging to them were seized during the search of Cosmos Group, thereby challenging the jurisdiction under the pre-amended Section 153C (applicable before 01.06.2015).

The CIT(A) held that the post-amended provisions of Section 153C (effective from 01.06.2015) were applicable since the notice under Section 153C was issued in October 2016. According to the CIT(A), the material received by the A.O related to the appellant, thus validating the jurisdiction.

However, the Tribunal found that the search was conducted on 24.09.2014, and hence the pre-amended provisions of Section 153C should apply. The Tribunal noted that the Excel file "Jewels wrkng up to 31.08.2014.xls" and the statement of Shri. Suraj Parmar pertained to the appellant but did not belong to them. Citing various judicial pronouncements, the Tribunal concluded that the A.O could not have validly assumed jurisdiction under the pre-amended Section 153C as the documents did not belong to the appellant.

2. Treatment of the Statement of Shri. Suraj Parmar:
The appellant contended that the CIT(A) erred in treating the statement of Shri. Suraj Parmar as a document belonging to them. The CIT(A) clarified that the A.O did not treat the statement as a document belonging to the appellant but as material relating to them.

The Tribunal upheld that the statement of Shri. Suraj Parmar could not be considered a document belonging to the appellant, reinforcing that the jurisdiction under Section 153C was assumed incorrectly.

3. Rejection of Grounds Related to Non-Provision of Backup/Soft Copy of Unaccounted Tally Data and Violation of Principles of Natural Justice:
The appellant argued that the A.O failed to provide the backup/soft copy of the unaccounted tally data seized from Cosmos Group and passed the order in haste, violating principles of natural justice.

The Tribunal did not delve into these contentions in detail, as it quashed the assessment for want of jurisdiction. Thus, these grounds were left open without specific adjudication.

4. Addition of ?1,74,99,600/- and ?6,55,64,120/- on Account of Alleged On-Money Received:
The A.O added ?1,74,99,600/- and ?6,55,64,120/- for A.Y 2013-14 and A.Y 2014-15 respectively, based on the alleged on-money received from Suraj Parmar or Cosmos Group. The CIT(A) confirmed these additions.

However, the Tribunal, having quashed the assessments for want of jurisdiction under Section 153C, did not address the merits of these additions. The contentions regarding the merits of the case were left open.

Conclusion:
The Tribunal allowed the appeals for A.Y 2013-14 and A.Y 2014-15, quashing the assessments framed under Section 153C r.w.s 143(3) for want of jurisdiction. The Tribunal concluded that the pre-amended provisions of Section 153C applied, and the A.O could not assume jurisdiction as the seized documents did not belong to the appellant. The merits of the case were not adjudicated, leaving those contentions open.

← Previous Next →