9911796707
TMI Blog2012 (4) TMI 335X X X X Extracts X X X X X X X X Extracts X X X X ..... On 5th January 2009, there was a search under Section 132 of the Act of the Puri Group of Companies namely, Puri Construction Ltd. and its associate concerns. We are not concerned with the validity of the search on Puri Group of Companies in the present writ petition. Section 153C of the Act provides for the assessment of income of any person other than the person who is searched under Section 132. It is enough to notice that under sub-section (1) of Section 153C, if the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized in the course of the search belongs to a person other than the person who was searched, then such assets or books of account or documents shall be handed over by him to the Assessing Officer having jurisdiction over such other person. Once that is done, the Assessing Officer having jurisdiction over such other person shall proceed against him for making an assessment or re-assessment of his income in accordance with the provisions of Section 153A. The petitioner herein was not searched under Section 132 of the Act. However, some documents belonging to it were found during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Delhi" A copy of the satisfaction note as well as the Collaboration Agreement dated 28.4.2006 and the Assignment Agreement dated 21.7.2006, which find mention in the satisfaction note were supplied to the petitioner by the Assessing Officer under cover of letter dated 5.12.2010, which is Annexure P7 of the writ petition. 3. Enquiries were made from the petitioner pursuant to the issue of notice to it on the basis of the aforesaid documents and the satisfaction note. The petitioner was asked by the investigation wing of the income tax department about the nature of the monies received by the petitioner from Emaar MGF Land Ltd. (hereinafter referred to as MGF). In response to the enquiries, the petitioner by letter dated 19.2.2009 informed the investigation wing that the monies received from MGF were held by it as security deposit in terms of the Assignment-cum-Nomination Agreement dated 21.7.2006 between it and MGF for sale of development rights, which have been acquired by the petitioner from the Puri Group of Companies. The petitioner explained to the income tax authorities that the amounts received for sale of the development rights from MGF were duly reflected in its audited ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 143(3) read with Section 153C by order dated 30.12.2010. For this year also the petitioner had filed a return declaring income of Rs.Nil on 2.12.2010 in response to the notice issued under Section 153A. In the course of the assessment proceedings, the Assessing Officer, who is the respondent in the present proceedings, referred to the agreements seized during the search in the offices of Puri Group of Companies and held that a reading of documents and the transactions recorded therein prima facie showed that the petitioner had sold development rights in the land, the profit from which are taxable in the assessment year 2007-08. He also noticed that the assessee had received a sum of Rs.44 crores as deposit in the previous year relevant to the assessment year 2008-09 from MGF, which was not offered for taxation in that year. The respondent therefore asked the petitioner to explain why no income was offered from the transaction despite receipt of a substantial amount for the transfer of the development rights. In response to the same, the petitioner filed a detailed reply, the gist of which is that the money was received as security deposit and not as income and that until and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he said method and was in fact shown in the subsequent assessment year. This plea was however, turned down by the Assessing Officer on the ground that the petitioner is not a contractor or developer and that it had purchased and sold development rights and therefore the profits cannot be assessed on the basis of the percentage of completion method. In this view of the matter the entire amount of Rs.86 crores was assessed in the assessment year 2007-08 by order dated 30.12.2010, passed under Section 153C read with Section 143(3) of the Act. 7. It is against the aforesaid assessment orders for the assessment years 2003-04 to 2008-09 passed on 29.12.2010 and 30.12.2010 that the petitioner has filed the present writ petition. The main contention of the petitioner is that the Assessing Officer has illegally assumed jurisdiction under Section 153C read with Section 153A of the Act, that there was no undisclosed income to be assessed in the petitioner's hands and therefore a writ of certiorari should issue to quash the proceedings as null and void. 8. It has been averred in the writ petition that appropriate disclosures had been made in the audited accounts of the petitioner for the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed in the writ petition, Mr. Bajpai, ld. senior counsel for the petitioner, drew our attention to several authorities. In particular he laid emphasis on the following judgments: (1) L R Gupta Vs. UOI (1992) 194 ITR 32 (Del.) (2) Ajit Jain Vs. UOI (2000) 242 ITR 302 (Del.) (3) Saraya Industries Ltd. Vs. UOI (2008) 306 ITR 189 (Del.) (4) Balwant Singh Vs. Jagdish Singh (2010) 8 SCC 685 11. Controverting the contentions in the writ petition and the points raised by Mr. Bajpai, ld. sr. counsel for the petitioner, Mr. N P Sahni, ld. sr. standing counsel put forth the following submissions : (a). Both the finalisation of the accounts for the year ended 31.3.2009 and the audit of the accounts for the said period were carried out much after the date of the search which took place on 5.1.2009 and therefore on the date on which the search took place it was perfectly legal for the Assessing Officer to invoke the procedure prescribed in Section 153C (1) and forward the seized documents to the Assessing Officer having jurisdiction over the petitioner; (b). At the time when the documents are found and seized, the procedure prescribed by Section 153C(1) merely enables the Assessing Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... second proviso to Section 153A, which says that if any of those returns is or are pending, the assessment or reassessment relating to those returns shall abate. The object obviously is to avoid multiplicity of assessment or reassessment proceedings in respect of the same assessment year or years. Once Section 153A is found to be applicable, there will be only one assessment in respect of each of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted, in which the "total income" of the assessee will be assessed or reassessed. It should be remembered that only the pending assessment or reassessment proceedings in respect of any those six assessment years that will abate; in case the assessment or reassessment for any of those 6 years have already been completed as on the date of search then there is no question of any of them abating for the simple reason that what can abate is only what remains pending. 14. Now there can be a situation when during the search conducted on one person under Section 132, some documents or valuable assets or books of account belonging to some other person, in whose case th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 16. It will be appreciated from the above that the procedure envisaged by Section 153C, which is applicable to the petitioner herein, does not in any way infringe any rights of the petitioner or curtail or curb his right to be heard by the Assessing Officer or to file appeals and question the assessments made pursuant to the notice under Section 153A. There is no ground for any apprehension that the petitioner will not be heard before the assessments or reassessments for the six assessment years are completed. In fact, in the case of the petitioner itself the Assessing Officer has not made any addition in the assessments completed under Section 153A read with Section 153C for the assessment years 2003-04 to 2006-07 and 2008-09. He has made the addition of Rs.86 crores only in the assessment year 2007-08 against which an appeal has already been filed, as stated by the ld. senior standing counsel. This also finds mention in para VI of the counter affidavit filed by the respondent. Thus, full opportunity of being heard is available, and in fact was made available to the petitioner herein to represent against the proposed assessments or reassessments. The apprehension expressed by M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , may be of some use. This section provided for assessment of the undisclosed income by any person other than the person searched under Section 132. It applies to search conducted prior to 31.05.2003. It provided as follows: "Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other 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 such other person and the provisions of this Chapter shall apply accordingly." (underlining ours) It will be seen that whereas Section 158D refers to the satisfaction of the Assessing Officer that any "undisclosed income" belongs to any person other than the searched person, Section 153C(1) in contrast refers merely to the satisfaction of the Assessing Officer that the valuable article or books of account or document "belongs" to a person other than the searched person. The latter pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n to belong to any other person, the procedure stated therein should be followed. Therefore, nothing is to be gained from saying that the pre-conditions mentioned in clauses (a), (b) and (c) of sub-section (1) to Section 132 have not been satisfied vis-à-vis the petitioner so as to confer legality upon the seizure of the documents in question. In our opinion, it is not necessary for the revenue authorities to have reasons to believe that the petitioner would not produce any books of account or document or that the petitioner is in possession of any money, bullion, jewellery or other valuable article or thing which it had not or will not disclose for the purpose of the assessment proceedings. The petitioner was not searched. Search was on a third person and validity of the seizure has to be examined with reference to the said person searched. At the time when the Assessing Officer having jurisdiction over the searched person reaches the satisfaction that the document belongs to a person other than the searched person, it is not necessary for him to also reach a firm conclusion/ opinion that the document shows undisclosed income belonging to such other person. That is a matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there is evidence adduced by them to show and establish that the income reflected by the valuable article or books of accounts or document seized during the search has already been disclosed by them. Even if they tend to act unreasonably or under misplaced enthusiasm, there are adequate safeguards which can be availed of by those persons. The apprehensions expressed by Mr. Bajpai in our opinion and with respect, are unfounded. 21. The above discussion in our opinion is sufficient to dispose of the contentions of the ld. senior counsel for the petitioner. However, in the course of the arguments there was a debate as to whether the petitioner was justified in following the percentage of completion method of accounting for recognising the income from the sale of the development rights. We have gone through the relevant documents to which our attention was drawn by both the sides in support of their rival stands, but we do not think that it would be proper for us to examine the question since the assessment order for the assessment year 2007-08 passed under Section 153C read with 143(3) on 30.12.2010 is under appeal before the CIT (Appeals). Even otherwise, in proceedings under Articl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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