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TMI Blog2017 (8) TMI 1298X X X X Extracts X X X X X X X X Extracts X X X X ..... of benefits of Sections 11 and 12 etc. are concerned, the same would not be affected. - Civil Appeal No.11080 of 2017 (Arising Out of Slp (C) No. 25257 of 2015), Civil Appeal No.11081 of 2017 (Arising Out of Slp (C) No. 25258 of 2015), Civil Appeal No.11082 of 2017 (Arising Out of Slp (C) No. 27323 of 2015) - - - Dated:- 29-8-2017 - Mr. A.K. Sikri And Mr. Ashok Bhushan JJ. Civil Appeal No. 11083 of 2017 (Arising Out of Slp (C) No. 30278 of 2015) For the Petitioner : Ms. Anil Katiyar, AOR For the Respondent : Mr. Rustom B. Hathikhanawala, AOR JUDGMENT A.K. SIKRI, J. Leave granted. 2) All these four appeals are filed by the Commissioner of Income Tax-III, Pune (hereinafter referred to as the Revenue), wherein the respondent is also the same (hereinafter referred to as the assessee ). Even the issue that arises for consideration is identical in all these appeals. Reason for filing four appeals is that the dispute pertains to four Assessment Years, i.e. 2000-01, 2001-02, 2002-03 and 2003-04. In fact, for this very reason the High Court has decided the issue by common judgment dated March 25, 2015, the correctness whereof is challenged by the Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts and the changes to be effected on account of the change in the status of the assessee to that of AOP, a special audit under Section 142(2A) of the Act was conducted. On the basis of special audit report, taxable incomes for the Assessment Years 1999-2000 to 2006-07 had been worked out. 7) Since the documents were recovered from Mr. Navale and sought to be used against the assessee, for undertaking this exercise it is imperative that a Satisfaction Note is recorded by the AO of the person searched for use of those documents against the third person (assessee herein), which is a pre-condition for initiation of proceeding under Section 153C of the Act. This Satisfaction Note was recorded on April 18, 2007. In this Note, after discussing the documents which were recovered and seized in the search carried out on Mr. Navale, the AO recorded his satisfaction to the effect that the assessee trust cannot be considered as a genuine trust; it was receiving extra money over and above the fee fixed by the competent authority; it was not adhering to the object of providing education to the masses and managing trustees were using the assessee s trust for their own benefits. Thus, the notice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he relevance and correctness of the seized material is clearly established. (vii) The undisclosed income, on account of donations collected, for A.Y. 2006-07, has been worked out and taxed in this order. (viii) Seized material clearly shows collection of donations/capitation fee on one hand and expenditure/outgoings on the other hand. (ix) Instances of siphoning and diversion of amounts, out of receipts on account of donations/capitation fee, are evident from the seized material. (x) Number of assets of the Principal trustee/related persons have been found/seized as against nominal incomes returned and known sources of income. The assets/benefits derived are possible only because of receipts on account of donations/capitation fee. (xi) The theory of bigger HUF and obtaining of decree from the Court is an effort only to escape the rigours of laws relating to taxation. The said decree of the Hon. Court has been obtained by misrepresentation and suppression of facts. The same is not accepted by the department and appropriate course of action is contemplated. (xii) Siphoning of money, diversion of amounts, creation of assets, all out of the receipts on account of dona ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granting admissions, which were the reasons for denying the benefits under Sections 11 and 12 of the Act and that the assessment was made keeping in view the Special Audit Report. 11) Coming to the issue pertaining to the validity of notice under Section 153C of the Act, submission of the learned Solicitor General was that the ITAT committed gross error in allowing this additional ground ignoring a material fact that the assessee had not objected to the jurisdiction under Sections 153C or 147 of the Act at any stage in the course of the assessment proceedings which were duly recorded by the AO in his order. It was argued that the ITAT did not discuss the merits of the case at all and quashed the entire proceedings by discussing the legality and validity of the notice under Section 153C of the Act only. He further pointed out that even the High Court dismissed the appeal of the Revenue on the same very ground. 12) The learned Solicitor General also referred to the judgment dated March 29, 2012 of the Delhi High Court in the case of SSP Aviation Limited v. Deputy Commissioner of Income Tax , (2012) 20 taxmann.com 214 (Delhi), as well as the judgment dated December 24, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment Years i.e. Assessment Year 1999-2000 to Assessment Year 2006-07. As noted above, insofar as Assessment Year 1999-2000 is concerned, same was covered under Section 147 of the Act which means in respect of that year, there were re-assessment proceedings. Insofar as Assessment Year 2006-07 is concerned, it was fresh assessment under Section 143(3) of the Act. Thus, insofar as assessment under Section 153C read with Section 143(3) of the Act is concerned, it was in respect of Assessment Years 2000-01 to 2005-06. Out of that, present appeals relate to four Assessment Years, namely, 2000-01 to 2003-04 covered by notice under Section 153C of the Act. There is a specific purpose in taking note of this aspect which would be stated by us in the concluding paragraphs of the judgment. 16) In these appeals, qua the aforesaid four Assessment Years, the assessment is quashed by the ITAT (which order is upheld by the High Court) on the sole ground that notice under Section 153C of the Act was legally unsustainable. The events recorded above further disclose that the issue pertaining to validity of notice under Section 153C of the Act was raised for the first time before the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy. 20) Insofar as the judgment of the Gujarat High Court relied upon by the learned Solicitor General is concerned, we find that the High Court in that case has categorically held that it is an essential condition precedent that any money, bullion or jewellery or other valuable articles or thing or books of accounts or documents seized or requisitioned should belong to a person other than the person referred to in Section 153A of the Act. This proposition of law laid down by the High Court is correct, which is stated by the Bombay High Court in the impugned judgment as well. The judgment of the Gujarat High Court in the said case went in favour of the Revenue when it was found on facts that the documents seized, in fact, pertain to third party, i.e. the assessee, and, therefore, the said condition precedent for taking action under Section 153C of the Act had been satisfied. 21) Likewise, the Delhi High Court also decided the case on altogether different facts which will have no bearing once the matter is examined in the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d any merit in these appeals. 22) We now advert to the implication of the fact which has been emphasised in para 15. As pointed out in the said para, the assessment order passed by the AO covers eight Assessment Years. Assessment done in six Assessment Years is under Section 153C of the Act. Assessment order is set aside only in respect of four such Assessment Years that too on the technical ground, noted above. This objection pertaining to the four Assessment Years in question does not relate to the other two Assessment Years, namely, 2004-05 and 2005-06. Likewise, this decision has no bearing in respect of assessment done qua Assessment Year 1999-2000 as well as Assessment Year 2006-07. The necessary consequence would be that insofar as the conclusions of the AO in his assessment order regarding the activities of the trust not being genuine and not carried out in accordance with the trust deed or cancellation of registration, denial of benefits of Sections 11 and 12 etc. are concerned, the same would not be affected by this judgment. It is, thus, clarified that this Court has not dealt with the matter on merits insofar as incriminating material found against the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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