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TMI Blog2020 (7) TMI 152X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and the circumstances of the appellant s case and in law the learned CIT(A) erred in holding A.O s action of treating the statement of Shri. Suraj Parmar as the document belonging to the appellant. 3. On the facts and the circumstances of the appellant s case and in law the learned CIT(A) erred in rejecting/dismissing following two original grounds of appeal raised before him: (a). On the facts and the circumstances of the appellant s case and in law the learned Assessing Officer erred in not providing the back up/soft copy of the unaccounted tally data seized from the premises of Cosmos Group. (b). On the facts and the circumstances of the appellant s case and in law the learned Assessing Officer erred in passing the impugned order in great haste by violating the principles of natural justice and fair play. 4. On the facts and the circumstances of the appellant s case and in law, the Ld. CIT(A) erred in confirming the A.O s action of making addition of 1,74,99,600/- on account of alleged on-money received from Suraj Parmar or Cosmos Group. 5. The appellant craves leave to add to, alter, amend and/or delete all or any of the foregoing grounds of appeal. 2. Briefly stated, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h proceedings Shri. Suraj Parmar, promoter of Cosmos group was asked to explain one of the attachment file viz. Jewels wrkng up to 31.08.14.xls appearing in the email [email protected] that formed part of the seized document viz. Annexure A-1. In reply, it was stated by him that the aforesaid attachment file contained information as regards the unaccounted cash sales of a project viz. Cosmos Jewels containing the buildings named Sapphire I, Sapphire II, Solitaire I, Solitaire II, Ruby I and Ruby II that were constructed by the Cosmos group in Joint venture with the assessee company viz. M/s Riddhi Siddhi Developers Pvt. Ltd which was the owner of the plot on which the aforesaid buildings were constructed. Shri. Suraj Parmar further stated that as per the terms of the Joint Venture agreement the Cosmos group was to give 40% of the sale component, i.e both cash and cheque to the assessee and none of the cash component of the project formed part of the regular books of accounts or was offered to tax. Observing, that a perusal of the aforesaid seized document viz. Annexure A-1 revealed that M/s Cosmos Lifestyles during the period relevant to A.Y 2013-14 was in receipt of on-money aggr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich had come into effect from 01.06.2015 would be applicable in its case. On the basis of his aforesaid conviction the CIT(A) concluded that if the A.O was satisfied that any money, bullion or jewellery or other valuable article or thing, seized or requisitioned, belongs to; or books of account or documents, seized or requisitioned pertains to or any information contained therein relates to a person other than the person referred to in Sec. 153A, then the conditions for assuming jurisdiction under Sec. 153C stood satisfied. In fact, the CIT(A) observed that in a case under Sec. 153C reference to the date of initiation of search u/s 132 was to be considered as a reference to the date of receiving the books of accounts or documents or assets seized or requisitioned by the A.O having jurisdiction over such other person. On the basis of his aforesaid conviction the CIT(A) was of the view that as per Sec. 153C the date of search would be the date of requisition of material by the A.O, which in the present had taken place in October, 2016, therefore, the post-amended provisions of Sec. 153C which had come into effect from 01.06.2015 would be applicable. As such, the CIT(A) backed by his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid claim of the assessee, the CIT(A) was of the view that as per Sec. 153C as the date of search would be the date of requisition of material by the A.O, which in the present case had taken place in October, 2016, therefore, the post-amended provisions of Sec. 153C, i.e which had come into effect from 01.06.2015 would be applicable. Accordingly, on the basis of his aforesaid conviction the CIT(A) had concluded that as the material received by the A.O on the basis of which notice under Sec. 153C was issued related to the assessee, therefore, the notice therein issued was perfectly valid and legal. 8. Before adverting any further, it would be relevant to cull out the provisions of Sec. 153C i.e pre-amended (i.e applicable prior to 01.06.2015) and also the post-amended (i.e applicable w.e.f 01.06.2015), relevant extract of which reads as under: (i). Sec. 153C (as was available on the statute upto 31.05.2015) i.e pre-amended : 153C(1). Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets seized or requisitioned by the Ld. A.O having jurisdiction over such other person. There is no ambiguity in the provisions of Sec. 153C. The date of search would be the date of requisition of material by the Ld. A.O., in this case it is in October,2016. Therefore, the section which is in vogue clearly demonstrates that the material has to pertain or relate to the person and not just belonging to the person. Therefore, I have no hesitation in stating that the information which was received by Ld. A.O on the basis of which notice u/s 153C has been issued relates to the assessee and notice u/s 153C is perfectly valid and legal. 5.4.2 The ld. Counsel also raised the issue that the statement of Shri. Suraj Parmar was treated as document belonging to the appellant and notice u/s 153C issued. However, as discussed already and also seen from the remand report of the Ld. A.O, the statement of Shri Suraj Parmar was not treated as document belonging to the appellant. It is one of the material which relates to the appellant and there was a lot of information pertaining to the appellant found in e-mail accounts of the Cosmos group which formed the basis of satisfaction note of the Ld. A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, in order to examine whether M/s Riddhi Siddhi Developers Pvt. Ltd. whose key person is Shri Bharat Jhunjhunwala had offered the revenue of cheque and cash component received from Cosmos Group on sale of flats/shops in the project, Cosmos Jewels, a separate file was opened in the case of M/s Riddhi Siddhi Developers Pvt. Ltd. Summons u/s 131 of the IT. Act was issued to M/s Riddhi Siddhi Developers Pvt. Ltd., asking to file certain details. In response to the notice u/s 131, M/s Riddhi Siddhi Developers Pvt. Ltd. filed the requisite details vide its letter dated 28.09.2015. Also, a statement on oath u/s 131 was recorded of Shri. Bharat Jhunjhunwala on 12.10.2015. Though Shri Bharat Jhunjhunwala denied to have received any cash amount from Cosmos group, the seized data clearly indicate the amount of cash received by M/s Riddhi Siddhi Developers Pvt. Ltd., which is prepared as Table 1. In view of the above, I am satisfied that the above mentioned seized documents belong to a person i.e, the assessee, other than the person referred to in section 153A within the meaning of provisions of section 153C of the Act. Accordingly proceedings u/s 153C of the Act is initiated in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he proceedings could only be initiated against the assessee i.e a person other than the person searched, only if the document seized during the course of the search proceedings belonged to such other person. It was observed by the Hon ble Jurisdictional High Court, as under: 6. We note that in terms of Section 153C of the Act at the relevant time i.e. prior to 1st June, 2015 the proceedings under Section 153C of the Act could only be initiated/proceeded against a party - assessee if the document seized during the search and seizure proceedings of another person belonged to the party - assessee concerned. The impugned order records a finding of fact that the seized documents which formed the basis of initiation of proceedings against the respondent assessees do not belong to it. This finding of fact has not been shown to us to be incorrect. Further, the impugned order placed reliance upon a decision of Gujarat High Court in Vijaybhai Chandrani vs. ACIT 333 ITR Page 436 which records that the condition precedent for issuing notice under Section 153C of the Act is that the document found during search proceedings should belong to assessee to whom notice is issued under Section 153C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le High Court of Delhi that the essential jurisdictional requirement for assumption of jurisdiction under Sec. 153C of the Act (as it stood prior to its amendment with effect from 1st June, 2015) qua the other person was that the seized document forming the basis of the satisfaction note must not merely pertain to the other person but must belong to the other person . Observing, that as in the case before them the document though pertained to the assessee, but the same did not belong to them, the High Court concluded that the essential jurisdictional requirement to justify the assumption of jurisdiction under Sec. 153C was not satisfied. In the aforesaid case the Hon ble High Court held as under: 28.4 The Supreme Court also agreed with the decision of the Gujarat High Court in Kamleshbhai Dharamshibhai Patel (supra) to the extent it 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. The Supreme Court observed: This proposition of law laid down by the High Court is corr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dings belonged to the assessee i.e a person other than the person searched, and it was not open for the revenue to point out that the document in question pertained to or related to the assessee. It was observed by the Hon ble High Court, as under: 16. At the outset, it requires to be noticed that the search in the present case took place on 19th June 2009 i.e., prior to the amendment in Section 153 C (1) of the Act with effect from 1st June 2015. Therefore, it is not open to the Revenue to seek to point out that the document in question, pertains to or relates to the Assessee. The example given by this Court in Pepsico India Holding Ltd. (supra) is that of a photocopy of a sale deed which contains the names of the vendor and the vendee being found with the broker. The mere fact that such photocopy of the sale deed was found with the broker would not lead to the conclusion that such a document 'belongs to‟ either the vendor or the vendee. While in the present case the AO in his satisfaction note does record that the document in question does not belong to Mr. Lalit Modi i.e. the searched person, he does not indicate on what basis he proceeds as if the document belonged to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person: (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year (a) no return of income has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is after such satisfaction is arrived at that the document is handed over to the Assessing Officer of the person to whom the said document belongs . In the present cases it has been urged on behalf of the petitioner that the first step itself has not been fulfilled. For this purpose it would be necessary to examine the provisions of presumptions as indicated above. Section 132(4A)(i) clearly stipulates that when inter alia any document is found in the possession or control of any person in the course of a search it may be presumed that such document belongs to such person. It is similarly provided in Section 292C(1)(i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or satisfaction that the document in fact belongs to somebody else. There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Ltd. (supra):- It needs to be appreciated that the satisfaction that is required to be reached by the Assessing Officer having jurisdiction over the searched person is that the valuable article or books of account or documents seized during the search belong to a person other than the searched person. There is no requirement in section 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclose any undisclosed income. 9. It is only in this context that the Division Bench was of the view that the issuance of the 153C notice was only first step in the process of enquiry. 10. The only thing that remains to be examined now is the satisfaction note itself. The satisfaction note dated 02.08.2013 is in respect of the assessment years 2006-07 to 2011-12 and the same reads as under:- M/s Pepsi Foods Pvt. Ltd. AY 2006-07 to 11-12 02.08.2013 Satisfaction Note for issue of Notice u/s 153C of Income Tax Act, 1961 in the case of M/s Pepsi Foods Pvt. Ltd, for the Assessment Years 2006-07 to 2011-12. Satisfaction Note A search and seizure operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g or books of account or documents seized or requisitioned belong or belongs to a person other than the person referred to in section 153A, then the books of account, or 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 issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A. In view of facts narrated above, I am satisfied that the case of M/s Pepsi Foods Pvt. Ltd. is a fit case for issue of notice u/s 153C of the I.T. Act, 1961. Notice u/s 153C dated 02.08.2013 is issued requiring the assessee to file return of income for the A.Y. 2006-07 to 2011-12. (Pukini Lokho) Asstt. Commissioner of Income Tax, Central Circle-12, New Delhi 11. It is evident from the above satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under Section 153C, there is nothing which would indicate as to how the presumptions which are to be normally raised as i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. (supra), it must be seen as to whether the Assessing Officer of the searched person (the Jaipuria Group) could be said to have arrived at a satisfaction that the documents mentioned above belonged to the petitioners. 14. First of all we may point out, once again, that it is nobody‟s case that the Jaipuria Group had disclaimed these documents as belonging to them. Unless and until it is established that the documents do not belong to the searched person, the provisions of Section 153C of the said Act do not get attracted because the very expression used in Section 153C of the said Act is that where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A .... In view of this phrase, it is necessary that before the provisions of Section 153C of the said Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e., the searched person). In the Satisfac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... os group on 24.09.2014, however, as the A.O had issued the notice under Sec. 153C on 13.10.2016, and thus assumed jurisdiction in the case of the assessee under Sec. 153C in October, 2016, therefore, the post-amended provisions of Sec. 153C i.e which had come into effect from 01.06.2015 would be applicable in its case. On the basis of his aforesaid conviction the CIT(A) concluded that if the A.O was satisfied that any money, bullion or jewellery or other valuable article or thing, seized or requisitioned, belongs to; or books of account or documents, seized or requisitioned pertains to or any information contained therein relates to a person other than the person referred to in Sec. 153A, the conditions for assuming jurisdiction in the case of such other person under Sec. 153C would be satisfied. In sum and substance, the CIT(A) held a conviction that as in a case under Sec. 153C the reference to the date of initiation of search u/s 132 shall be considered as a reference to the date on which the A.O having jurisdiction over the person other than the searched person had received the books of accounts or documents or assets seized or requisitioned, which in the case before him had ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ended provision, whether it has to be considered in the context of the date of search or date of recording of satisfaction by the Assessing Officer of the searched person or the date of issuance of notice under section 153C of the Act. 19.6 On behalf of the respondents it has been contended that section 153C of the Act is a machinery provision. In Calcutta Knitwears (supra), the Supreme Court has held that while interpreting a machinery provision, the courts would interpret a provisions in such a way that it would give meaning to the charging provisions and that the machinery provisions are liberally construed by the courts; and that it is the duty of the court while interpreting the machinery provisions of a taxing statute to give effect to its manifest purpose, the section should be liberally construed. The court has further held that wherever the intention to impose liability is clear, the courts ought not to be hesitant in espousing a commonsense interpretation to the machinery provisions so that the charge does not fail. The machinery provisions must, no doubt, be so construed as would effectuate the object and purpose of the statute and not defeat the same. It is contended th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and cannot be said to be a mere change in the procedure. Since the amendment expands the scope of section 153C of the Act by bringing in an assessee if books of account or documents pertaining to him or containing information relating to him have been seized during the course of search, within the fold of that section, this question assumes significance, inasmuch as in the facts of the present case, as on the date of search, it was only if such material belonged to a person other than the searched person, that the Assessing Officer of the searched person could record such satisfaction and forward the material to the Assessing Officer of such other person. However, subsequent to the date of search, the amendment has been brought into force and based on the amendment, the petitioners who were not included within the ambit of section 153C of the Act as on the date of the search, are now sought to be brought within its fold on the ground that the satisfaction note and notice under section 153C of the Act have been issued after the amendment came into force. Therefore, this case does not relate to the interpretation of the provisions of any of the sections, but relates to the stage at w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in record satisfaction as contemplated under the amended provision and forward the material to the Assessing Officer of such other person. The answer would be an emphatic no as the Assessing Officer of the searched person after recording the earlier satisfaction would have already forwarded the material to the Assessing Officer having jurisdiction over the other person, therefore, there would be no question of his again forming a satisfaction as required under the amended provisions of section 153C of the Act. 19.11 In the opinion of this court, if a date other than the date of search is taken to be the relevant date for the purpose of recording satisfaction one way or the other, it would result in an anomalous situation wherein in some cases, because the notices under section 153C of the Act were issued prior to the amendment, they would be set aside on the ground that the books of account or documents seized or requisition did not belong to the other person though the same pertained to or the information contained therein related to such person, whereas in other cases arising out of the same search proceedings, merely because the notices are issued after the amendment, the same w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee 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. 13. As we have quashed the assessment framed by the A.O under Sec. 153C r.w.s 143 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Sec. 153C r.w.s 143(3), dated 29.12.2016 for A.Y 2014-15 was framed in the case of the assessee company and its income was assessed at ₹ 40,47,61,360/-. 17. Aggrieved, the assessee assailed the assessment both as regards the validity of the jurisdiction assumed by the A.O under Sec. 153C of the Act, as well as the merits of the additions before the CIT(A). However, the CIT(A) not finding favour with the contentions advanced by the assesseee dismissed the appeal. 18. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. As the facts and the issue involved in the present appeal of the assessee remains the same as were there before us in its appeal for A.Y 2013-14 in ITA No. 646/Mum/2018, therefore, our order therein passed while disposing off the appeal of the assessee for A.Y 2013-14 shall apply mutatis mutandis for disposing the present appeal for A.Y 2014-15 in ITA No. 647/Mum/2018. Accordingly, the order passed by the CIT(A) is set aside and the assessment framed by the A.O under Sec. 153C r.w.s 143(3), dated 29.12.2016 is vacated on the same terms. 19. The appeal filed by the assessee is allowed in terms of our aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing, supplied by us now), all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment . In the rule so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether or not the passing of this order, beyond a period of ninety days in the case before us was necessitated by any extraordinary circumstances. 22. We find that the aforesaid issue after exhaustive deliberations had been answered by a coordinate bench of the Tribunal viz. ITAT, Mumbai F Bench in DCIT, Central Circle-3(2), Mumbai Vs. JSW Limited Ors. [ITA No. 6264/Mum/18; dated 14/05/2020, wherein it was observed as under: Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. The epidemic situation being grave, there was not much of a relaxation i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made time bound by this Court, the period for which the order dated 26th March 2020 continues to operate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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