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TMI Blog2018 (2) TMI 434X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2003-04 and 2004-05 deserve to be allowed on this legal issue only and since the assessments for these years are held as void, the appeals of the Revenue for these years deserve to fail. See CIT Versus RRJ Securities Ltd. And Vica-Versa [2015 (11) TMI 19 - DELHI HIGH COURT] Also remit the issue of additions on merits back to the file of the Assessing Officer to decide the same afresh in the light of directions/observations given by ITAT, Bench ‘B’ in the case of DCIT vs. M/s. Devi Dayal Petro Chemicals Pvt. Ltd [2014 (10) TMI 216 - ITAT DELHI] wherein held AO will first verify the years to which the seized documents belonged - There would be no justification for continuation of the proceedings under Section 153C to which the seized documents do not belong. If the transactions are duly accounted for in the books of account, as contended by the learned counsel, the AO will drop the proceedings initiated u/s 153C X X X X Extracts X X X X X X X X Extracts X X X X ..... sent case on the anvil of aforesaid facts, the Assessing Officer observed that the assessee had declared a closing stock of ₹ 17,22,87,423/- as on 31.03.2002 forming part of opening stock of the assessment year under consideration, purchase of textile goods of ₹ 32,91,900/- and sales thereof at ₹ 35,92,084/-. On being asked, the assessee submitted that the entire purchases of textile goods were made in cash and were not exigible to Sales Tax and therefore, there was no need to file and Sales Tax Record/returns. 5. The Assessing Officer further observed that during the post search enquiries conducted by Investigation Wing at the address of the assessee company, i.e., B-340, Hari Nagar, New Delhi, it was found that about 15 nos. of concerns of Thapar Group were declared as operating from this address. The names of such concerns are given at page 3 of the assessment order. It was also found in the post search enquiries that the above premises was a residential house of Shri Sudesh Sabharwal built up on a plot of land measuring 53 sq. yards with no signboards and was found closed. Therefore, statements of two neighbours Darshan Kumar and D. Bhattacharya were recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.02, no action is being taken for now. 9. Keeping in view the facts of the case and reply of the assessee, it is crystal clear that all cash purchases are unverifiable and hence a sum of ₹ 32,91,900/- is disallowed. (The opening stock is of the period before the block period of section 153C). Penalty proceedings u/s 271(c) are being initiated for furnishing inaccurate particulars of income. Since, the entire cash purchases of ₹ 32,91,900/- are bogus and are brought to tax as unaccounted expenditure u/s 69C of the IT Act, no further addition is made u/s 40A(3) of the IT Act since the entire amount of cash purchases is brought to tax. 10. Similarly, the expenses claimed by the assessee company in P & L a/c are also unverifiable as such 100% of the expenses are disallowed. Penalty proceedings u/s 271(c) are being initiated for furnishing inaccurate particulars of income. 6. Aggrieved by the assessment order, the assessee carried the matter in appeal before the ld. CIT(A), who after considering the detailed submissions of the assessee, order of the Assessing Officer, various case laws and attending facts of the case, rejected the claim of assessee on validity of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re the submission that assessment u/s. 153C of the Income Tax Act be restricted to assessment in respect of seized documents of incriminating nature for the year under consideration and in absence of any incriminating seized document, assessment framed u/s. 153C of the Income Tax Act for the year under consideration, is bad in law and deserve to be quashed. 5. That in view of the facts and circumstances of the case, the CIT (A) has erred in holding the conclusion that the 'audited books' notwithstanding, the book results are required to be rejected, since the narrations are artificial, sham and not reflective of the actual business / commercial transactions. 6. That in view of the facts and circumstances of the case, CIT (A) has erred in disregarding the purchases, the sales and the expenses claimed by the assessee company. 7. That in view of the facts and circumstances of the case and the provisions of law, CIT (A) has erred in wrongly directing the AO to work out the peak from the entries in the cash book of the assessee company for the relevant year and make a singular addition of the said amount, as unexplained investment/expenditure, ignoring the fact that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e searched person. In the instant case, since the statutory satisfaction has not been so recorded, the Assessing Officer of the Assessee is not entitled to acquire jurisdiction for initiating proceedings u/s. 153C as per law. It was also submitted that in the following cases of assessee group, the same satisfaction note, as recorded in the instant case, has been treated by the ITAT, Delhi Benches, to have been recorded in the case of assessee and not in the case of person searched and the Assessing Officer has been held to have no jurisdiction to initiate proceedings u/s 153C of the Act : (i). DCIT vs. Satkar Motors (ITA Nos. 6398 to 6403/Del/2013) and CO Nos.359 to364/Del./14) Order dated 29.10.2015. (ii) Tanvir Collections, 168 TTJ 145 (ITAT H Bench) (iii). DCIT vs. Ivan Infotech Pvt. Ltd. (ITA Nos. 18 to 23/Del./2014) and CO Nos. 272 to 277/Del./2014) Order dated 31.08.2016 and many other decisions of ITAT Delhi Benches in other group cases. (iv). ACIT vs. Saldi Chits Pvt. Ltd. (ITA Nos. 6697 to 6699/Del/13 and CO 396 to 398/Del./14 -Order dated 11.08.17-ITAT Delhi Bench) (iv). Sinhgad Technical Education Society (Civil Appeal No.11080 of 2017) (Supreme Court) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned is the jurisdictional AO of these cases." The AO of the searched person has recorded the satisfaction that the seized documents belonged to the Assessee. In similar circumstances in Satkar Fincap Ltd. (supra), this Court held likewise. The Satisfaction Note in the present case, therefore, satisfies the requirement of the law. Consequently, the question framed is answered in the negative i.e., in favour of the Revenue and against the Assessee." In view of above interpretation of Hon'ble jurisdictional High Court on the impugned text of satisfaction note, we have no reason to accept the contention of the assessee that the said satisfaction note was recorded in the case of assessee and not in the case of person searched as required by law. Besides, no specific ground has been has been raised in the cross objection on the satisfaction note in particular. Accordingly, this issue is decided against the assessee and we find no justification to disturb the findings reached by the ld. CIT(A) on this count. 12. The next contention of the assessee has been that the assessment orders for A.Yrs. 2003-04 and 2004-05 u/s. 153C are barred by limitation. Referring to the first proviso to sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rued with reference to the date of handing over of assets/documents to the AO of the Assessee. In this case, it would be the date of the recording of satisfaction under Section 153C of the Act, i.e., 8th September, 2010. In this view, the assessments made in respect of assessment year 2003-04 and 2004-05 would be beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue back to the file of Assessing Officer vide order dated 10.09.2014 observing as under : " Ld. Counsel of the assessee further stated that assessment framed is against the scheme of the Act whereby the reassessment u/s. 153C in such cases is to be confined to the additions and disallowances consequent to the material found during the course of the search. The additions which are not based on any incriminating material found during search are liable to be deleted. He also submitted that the revenue authorities have erred in law and on facts in holding that the audited books and transactions through bank nowithstanding, the book results are required to be rejected, since the entries are artificial, sham and not reflective of actual business / commercial transactions. Ld. Counsel of the assessee filed a Paper Book having pages 1 t 27 containing the assessment records etc. and draw our attention towards the Page No. 1 of the same Paper Book viz. Satisfaction Note dated 5.7.2010 for issuing Notice u/s. 153C of the I.T. Act, 1961 to the assessee for the assessment years 2003-04 to 2008-09 and stated that documents at pages 1 to 25 of Annexure A-25 seized by the department are th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingra, M/s Madhusudan Buildcon Pvt. Ltd. have been found to belong to M/s Devi Dayal Petro Chemicals Pvt. Ltd., Lane W-17-A, House NO. 18, Western Avenue, Sainik Farm South, New Delhi which has not been covered u/s. 132 of the I.T. Act, 1961. Accordingly, in terms of provisions of section 143C of the Act, notices u/s. 153C are hereby issued for the A.Y. 2003-04 to 2008-09 in the case of M/s Devi Dayal Petro Chemicals Pvt. Ltd.. The case was centralized in the Central Circle-17, New Delhi vide orders dated 14.12.2009 of CIT-IV, New Delhi. SD/- Dated 5.7.10 DCIT, Central Circle-17, New" 9.1 It was contended by the learned counsel that the documents mentioned by the Assessing Officer in the satisfaction note i.e. documents at pages 1 to 25 of Annexure A-5 are only the counterfoil of the cheque book which is duly accounted for in the books of account. He had also contended that the counterfoil belonged to the year 2008-09 and, therefore, the proceedings under Section 153C could not have been initiated for the years to which the documents do not belong and even after initiating proceedings to the year to which the documents belonged, the Assessing Officer ought to have dropp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings initiated under Section 153 of the years to which the seized documents do not belong. For the year to which the seized documents belonged, he will verify whether the transaction reflected by the seized documents are duly accounted for in the books of account. If the transactions are duly accounted for in the books of account, as contended by the learned counsel, the Assessing Officer will drop the proceedings initiated under Section 153C. However, if for the year to which the seized documents belonged, the transaction reflected by the seized documents is not recorded in the books of account, the proceedings under Section 153C will continue and the Assessing Officer will make the assessment afresh in accordance with law. Since we have set aside all the years under appeal, the Revenue's appeals on merits do not require any adjudication and they are also deemed to be allowed for statistical purposes. The Assessing Officer will proceed to make the assessment afresh only in the year where proceedings under Section 153C can validly continue in the light of the above decision of Hon'ble Jurisdictional High Court." Similar arguments have been advanced by both the parties in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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