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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 ..... ant's case and in law the learned CIT(A) erred in holding that the A.O has legally assumed jurisdiction u/s 153C despite the fact that no money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to the appellant and no books of accounts or documents seized or requisitioned pertains or pertain to or any other information contained therein relates to the appellant. 2. On the 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the e-mail system. The contents of the MS-excel sheets being attachments of e-mails found from the e-mail id [email protected] during the course of the search proceedings were printed and seized by the department as Annexure "A-1" [Pages 1-195]. Similarly, the contents of the e-mails found from the e-mail id [email protected] were printed and seized as Annexure "A-2" [Pages 1-73]. 4. During the course of the search 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 24.09.2014, therefore, no jurisdiction under Sec. 153C could have validly been assumed by the A.O in its case. 6. Observing, that the A.O had issued the notice under Sec. 153C dated 13.10.2016 which was received by the assessee on 22.10.2016, the CIT(A) was of the view that as the A.O had 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, 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 requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee drawing support from the pre-amended provisions of Sec. 153C (i.e applicable prior to 01.06.2015), had claimed, that the 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 in the course of the search proceedings conducted on the Cosmos group. Rebutting the 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 01.06.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n/material which was received by the A.O and had formed the basis of recording the 'satisfaction note' and issue of notice under Sec. 153C did not belong to the assessee but related and pertained to it. The observations of the CIT(A) are reproduced as under: "5.4.1 The Act is very clear that in a case u/s 153C reference to the date of initiation for search u/s 132 shall be considered a reference to the date of receiving the books of accounts or documents or assets 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 treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhi Siddhi Developers Pvt. Ltd. and this project was constructed vide a joint venture between Cosmos Group and M/s Riddhi Siddhi Developers Pvt. Ltd. Shri Suraj Parmar further stated that as per the terms of the JV, the Cosmos Group would give 40% of the sale component , both cash and cheque to M/s Riddhi Siddhi Developers Pvt. Ltd. and none of the cash component of the project formed part of the regular books of accounts nor was offerd to tax from the project. In view of the above 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i.e as applicable w.e.f 01.06.2015), however, we are afraid that de hors the 'belonging' of such seized documents by the assessee, the A.O could not have validly assumed jurisdiction under the pre-amended Sec. 153C (i.e prior to 01.06.2015). Our aforesaid view is fortified by the following judicial pronouncements: (i). CIT Vs. Arpit Land (P) Ltd.(2017)78 393 ITR 276 (Bom) : It was observed by the Hon'ble Jurisdictional High Court that as per the preamended Sec. 153C of the Act (i.e prior to 01.06.2015), the 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 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upheld. Therefore, in the present facts, the issue of Section 69C of the Act is academic. 8. In view of the above reasons and particularly the finding of fact that seized document which forms the basis of the present proceedings, do not belong to the petitioner and the same not being shown to be perverse, the question as raised does not give rise to any substantial question of law and thus not entertained." (ii).PCIT(Central)-2 Vs. Index Securities Pvt. Ltd. (2017) 86 taxmann.com 84 (Delhi) It was observed by the Hon'ble 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'pertain' to the Assessees, they did not belong to them. Therefore, one essential jurisdictional requirement to justify the assumption of jurisdiction under Section 153 C of the Act was not met in the case of the two Assessees." (iii). PCIT Vs. Vinita Chaurasia (2017) 394 ITR 758 (Del) : Adopting a similar view, the Hon'ble High Court of Delhi had observed that as per the pre-amended Sec. 153C (i.e prior to 01.06.2015), it was obligatory on the part of the revenue to show that the document seized during the course of the search proceedings 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 L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eeding any further it would be necessary to set out the relevant provisions of the said Act as applicable to the assessment years under consideration:- "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 account or documents seized or requisitioned belongs or belong 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xxxx xxxx xxxx" "292C.(1) Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 or survey under section 133A, it may, in any proceeding under this Act, be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; xxxx xxxx xxxx &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Dharamshibhai Patel (supra) is of no relevance insofar as the present case is concerned. In that case certain documents were said to have belonged to the petitioners therein but a plea had been taken that as the land, in relation to which the documents were, no longer belonged to the petitioners therefore the said documents could not be regarded as belonging to the petitioners. That is an entirely different situation and the facts of that case are clearly distinguishable from the facts of the present case. Insofar as the decision of the Allahabad High Court in Classic Enterprises (supra) is concerned, we are, with respect, unable to agree with the observations that as the proceedings are at the very initial stage the "satisfaction" is neither required to be firm or conclusive. We say so because we are of the view that this conclusion of the Allahabad High Court is premised on a consideration of the provisions of Section 158BD of the said Act which are entirely different from Section 153C. Under Section 158BD the Assessing Officer's satisfaction is with regard to "undisclosed income‟ belonging to a person other than the searched person. It is obvious that such satisfaction u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ic products, information technology and medical services. One of the major allegations against the Jaipuria Group is that the assessee group in order to reduce its taxable profit indulged in enhancing the cost of raw material purchased. On examination of the accounts of various concerns, it is noticed that raw material are procured from fixed vendors. Since bulk purchases are made, rates should have been lower. However raw material are being procured on a high rates resulting in lower taxable income. The bottler shall buy all units of concentrate required for the manufacture f the beverage from PFL (Pepsi Foods Ltd.), or a manufacturer approved in writing by PFL (Pepsi Foods Ltd.) at a price and in accordance with the terms and conditions established by the seller. Being the sole supplier of concentrate to Jaipuria Group, Pepsi Foods Pvt. Ltd. is closely associated to Jaipuria Gr. During the post search investigation, summons were issued to M/s Pepsi Foods Pvt. Ltd. to furnish certain details. The complete details were not furnished. The following documents were also found and seized during the course of search and seizure action u/s 132(1) of I.T. Act, 1961 belonging to (PFL) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion as used in Section 153C of the said Act. The satisfaction note itself must display the reasons or basis for the conclusion that the Assessing Officer of the searched person is satisfied that the seized documents belong to a person other than the searched person. We are afraid, that going through the contents of the satisfaction note, we are unable to discern any "satisfaction" of the kind required under Section 153C of the said Act. 12. This being the position the very first step prior to the issuance of a notice under Section153C of the said Act has not been fulfilled. Inasmuch as this condition precedent has not been met, the notices under Section 153C are liable to be quashed. It is ordered accordingly. The writ petitions are allowed as above. There shall be no order as to costs." (v). Pepsico India Holdings Pvt. Ltd. Vs. ACIT & Anr. (2015) 370 ITR 295 (Del): In the aforesaid judgment the Hon'ble High Court of Delhi reiterated the view that was earlier taken by it in the case of Pepsi Foods Pvt. Ltd.(supra). It was observed by the High Court that unless and until it is established that the 'document' in question do not belong to the searched person, the provisions of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that, as we have noted above, there is no disclaimer on the part of the Jaipuria Group insofar as these documents are concerned. 15. Secondly, we may also observe that the finding of photocopies in the possession of a searched person does not necessarily mean and imply that they "belong" to the person who holds the originals. Possession of documents and possession of photocopies of documents are two separate things. While the Jaipuria Group may be the owner of the photocopies of the documents it is quite possible that the originals may be owned by some other person. Unless it is established that the documents in question, whether they be photocopies or originals, do not belong to the searched person, the question of invoking Section 153C of the said Act does not arise. 16. Thirdly, we would also like to make it clear that the assessing officers should not confuse the expression "belongs to" with the expressions "relates to" or "refers to". A registered sale deed, for example, "belongs to" the purchaser of the property although it obviously "relates to" or "refers to" the vendor. In this example if the purchasers premises are searched and the registered sale deed is seized, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the aforesaid observations of the CIT(A) and are unable to persuade ourselves to subscribe to the same. In fact, we find that a similar issue had came up before the Hon'ble High Court of Gujarat in AnilKumar Gopikishan Agrawal Vs. CIT (2019) 418 ITR 25 (Guj). In the backdrop of its exhaustive deliberations the Hon'ble High Court concluded 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, observing as under: " The moot question that arises for consideration in the present case is as to what is relevant date from which the amended provisions of section 153C of the Act would be applicable. While the amended provisions have been expressly brought into force with effect from 1.6.2015, the controversy in the present case arises because the searches in all these case had been conducted prior to 1.6.2015, whereas the proceedings under section 153C of the Act have been initiated after that date and it is in this backdrop that the validity of the impugned notices has been called in question. It is the case of the petitioners that the proceedings under section 153C of the Act a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ks of account or documents seized or requisitioned pertain to or any information therein relates to such other person, the amended provisions should be so construed as would effectuate the object and purpose of the statute and not defeat the same, namely to tax the total income of the assessee. 19.7 In Calcutta Knitwears (supra) the Supreme Court has held that section 158-BD of the Act is a machinery provision and inserted in the statute book for the purpose of carrying out assessments of a person other than the searched person under sections 132 or 132A of the Act. The court has referred to its earlier decision in the case of J.K. Synthetics Ltd. v. CTO, (1994) 4 SCC 276, wherein it has been held thus: "16. It is well known that when a statute levies a tax it does so by inserting a charging section by which a liability is created or fixed and then proceeds to provide the machinery to make the liability effective. It, therefore, provides the machinery for the assessment of the liability already fixed by the charging section, and then provides the mode for the recovery and collection of tax, including penal provisions meant to deal with defaulters. ... Ordinarily the charging ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of satisfaction by the Assessing Officer of the searched person; or the date of recording of satisfaction by the Assessing Officer of the other person; or the date of issuance of notice under section 153C of the Act. 19.9 In the facts of the present case, the search was conducted in all the cases on a date prior to 1st June, 2015. Therefore, on the date of the search, the Assessing Officer of the person searched could only have recorded satisfaction to the effect that the seized material belongs or belong to the other person. In the present case, the hard disc containing in the information relating to the petitioners admittedly did not belong to them, therefore, as on the date of the search, the essential jurisdictional requirement to justify assumption of jurisdiction under section 153C of the Act in case of the petitioners, did not exist. It was only on 1st June, 2015 when the amended provisions came into force that the Assessing Officer of the searched person could have formed the requisite belief that the books of account or documents seized or requisitioned pertain to or the information contained therein relates to the petitioners. 19.10 In this backdrop, to test the stag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed therein relate to the other person. It could not have been the intention of the legislature to deal with two sets of identically situated persons differently, merely because in one case the Assessing Officer of the searched person records satisfaction as required under section 153C of the Act prior to the coming into force of the amended provisions and in any another case after the coming into force of the amended provisions." Accordingly, respectfully following the aforesaid view taken by the Hon'ble High Court, we are of the considered view 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. 12. Summing up, we are of the considered view that although the excel file "jewels wrkng up to 31.08. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vanced by the assessee insofar the merits of the case are concerned, which thus are left open. 14. The appeal of the assessee is allowed in terms of our aforesaid observations. A.Y 2014-15 ITA 647/Mum/2018 15. We shall now advert to the appeal of the assessee for A.Y 2014-15. The impugned order has been assailed on the following grounds of appeal before us : "1. On the facts and the circumstances of the appellant's case and in law the learned CIT(A) erred in holding that the A.O has legally assumed jurisdiction u/s 153C despite the fact that no money, bullion, jewellery or other valuable article or thing seized or requisitioned belongs to the appellant and no books of accounts or documents seized or requisitioned pertains or pertain to or any other information contained therein relates to the appellant. 2. On the 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 appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m/2018 and A.Y 2014-15 in ITA No. 647/Mum/2018, are allowed in terms of our aforesaid observations. 21. Before parting, we may herein deal with a procedural issue that though the hearing of the captioned appeal was concluded on 10.01.2020, however, this order is being pronounced much after the expiry of 90 days from the date of conclusion of hearing. We find that Rule 34(5) of the Income-tax Appellate Tribunal Rules, 1962, which envisages the procedure for pronouncement of orders, provides as follows: (5) The pronouncement may be in any of the following manners :- (a) The Bench may pronounce the order immediately upon the conclusion of the hearing. (b) In case where the order is not pronounced immediately on the conclusion of the hearing, the Bench shall give a date for pronouncement. In a case where no date of pronouncement is given by the Bench, every endeavour shall be made by the Bench to pronounce the order within 60 days from the date on which the hearing of the case was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon'ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that "In case the limitation expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown". Hon'ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, "It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly", and also observed that "arrangement continued by an order dated 26th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The extraordinary steps taken suo motu by the Hon'ble High Court and Hon'ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words "ordinarily", in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case." We have given a thoughtful consideration to the aforesaid observations of the tribunal and finding ourselves to be in agreement with the same, therein respectfully follow the same. As such, we are of the considered view that the period during which the lockout was in force shall stand excluded for the purpose of working out the time limit for pronouncement orders, as envisaged in Rule 34(5) of the Appellate Tribunal Rules, 1963. Order pronounced under rule 34(4) of the In ..... 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