9911796707
TMI Blog2021 (9) TMI 886X X X X Extracts X X X X X X X X Extracts X X X X ..... peals filed by the learned AO. 03. Since the issues involved in the Appeals and Cross-Objections for all these Assessment Years (A.Ys) are based on common facts and are interconnected, parties also made common submission before us, therefore all these appeals and Cos are disposed of by this common order. 04. The learned AO has raised the following grounds of appeal in ITA No. 5401/Del/2019 for the Assessment Year 2006-07:- "1. Ld. CIT (A) erred both in law & on facts in deleting the addition on account of cash transaction of Rs. 22,80,39,000/- in assessee's hands on protective basis, only on the basis that cash book found in Pen drive do not belong to assessee company, sole basis of such finding was order of Hon'ble Settlement Commission u/s 245 D(4) of the I.T.Act in case of Yadu Hari Dalmia, Gautam Dalmia, Puneet Dalmia & Jai Hari Dalmia, without realizing the facts that on the basis of same cash book found in pen drive, these 4 individuals accepted unaccounted income of Rs. 90 Crores & that employees of the company who maintained such cash book of unaccounted cash transaction namely Joy deep Basu, N. K. Berry, Sanjay Mitra & Director of company Sh. Puneet Dalmia accepted suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dras vide its order dated 29.07.2010, a. its cement business was demerged to Avnija Properties Ltd., b. refractory business was demerged to Dalmia Bharat Enterprises Ltd. c. Thermal power business was transferred to DCB Power Ventures Ltd. (a sub-subsidiary of Dalmia Bharat Enterprises Ltd) effective from 01.04.2010. e. On 31.12.2010, the name of M/s. Avnija Properties Ltd. was changed to M/s. Dalmia Cement (Bharat) Ltd. (PAN AADCA9414C) and it became a wholly owned subsidiary of Dalmia Bharat Enterprises Ltd. [now known as Dalmia Bharat Ltd. (DBL)]. Its name stands changed to Dalmia Cement (Bharat) Ltd. (PAN AADCA9414C) w.e.f 31.12.2010. f. Assessee company herein is Dalmia Bharat sugar industries Ltd i.e. DBSIL (i.e. erstwhile Dalmia cement Bharat Limited- PAN AAACD2281K). g. Search and seizure operations u/s 132 of the Income-tax Act, 1961 (hereinafter referred to as 'the Act') was conducted in the 'Dalmia Group of cases' including the cases of Dalmia Bharat Enterprises Ltd & the Dalmia cement Bharat the limited (new) and the premises of the directors/promoters namely Mr. Yadu Hari Dalmia & Mr. Puneet Dalmia of the Dalmia Group Companies on 20th January 2012, 27 & 28 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve and disclosing a sum of Rs. 90 Crores. Assessee claims that all impugned amounts involved in these appeals are included by Mr. Yadu Hari Dalmia and Mr. Gautam Dalmia in their application before Income tax Settlement Commission [ITSC]. ITSC passed an order u/s 245D (4) on 13/02/2015. It held that the contents of the impugned cashbook in the seized pen-drive belonged to Sri Yaduhari Dalmia & Sri Gautam Dalmia, (i.e. the promoters of the Dalmia group of companies) in their individual capacity. The ITSC vide its final order u/s 245D(4) had accepted the disclosure made by the said Mr. Yaduhari and Mr. Gautam Dalmia on the basis of the impugned pen-drive and the said order has attained finality by virtue of provision of section 245-I of the Act. vii. Further Substantive addition in the hands of Dalmia Cement Bharat Limited and protective addition s made in the hands of [1] Shri Joydeep Basu & [2] Dalmia Bharat Enterprises Limited were deleted by the Ld. CIT (A)-29, New Delhi vide separate orders passed in April & May 2015. viii. Reasons for deletion of addition is that Income-tax Settlement Commission had held that the contents of the impugned cash book in the seized pen-drive bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sdiction assumed by the Ld. A.O. u/s 153C vide its Cross-Objections. 11. As stated, a pen drive was found from the premises of Mr. Joydeep Basu. On the content of pen drive, statements of the employees of the group companies were recorded. Based on data contained in the pen drive as well as statements of employees of the group, LD AO in case of Dalmia cement Bharat limited held that the pen drive contains the data belonging to Shri Puneet Dalmia, which shows details of unaccounted cash received, and cash payment. Statement of suppliers of bags was also recorded. The AO of that company was also of the view that cement is the only business of the group earning money and therefore the cash is generated from cement business. Therefore, the learned AO of Dalmia cement Bharat Limited extrapolated the data of the pen drive and made an addition to the total income of Dalmia cement Bharat limited on substantive basis. 12. Similar additions were made on protective basis in the hands of two different assesses [1] Dalmia Bharat Enterprises Ltd [2] Mr. Joydeep Basu. 13. However, before the additions on substantive basis or on protective basis are made in the hands of Dalmia cement Bharat Lim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nged these orders of the learned CIT (A). These facts were also confirmed by the learned Asst Commissioner of income tax circle - 1, Trichy to the learned CIT (A) 22 in confirming that no second appeal has been preferred by revenue against the order of CIT (A), 29 in case of Dalmia cement Bharat Limited as well as Dalmia Bharat Enterprises Ltd and Mr. Joydeep Basu. 20. However, ld AO of assessee was of the view that the pen drive as well as the data contained therein belongs to the assessee. Therefore, he issued notices u/s 153C on 31/3/2014 for assessment year 2006 - 07 to assessment year 2011 - 12 based on the satisfaction note dated 25/3/2014 received from The Deputy Commissioner Of Income Tax, central circle - 2 contending that the impugned pen drive and the content thereof belong to the assessee company. The assessee questioned the notices and requested the learned AO to provide the basis for arriving at the satisfaction that these materials belong to the assessee. The AO on 4/2/2015 gave the statement of Mr. Joydeep Basu and the data/transactions recorded in the pen drive stating that these transactions belong to the assessee. The AO was also relying on an email communicatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come of the assessee at Rs. 939,827,900/-. Identical additions were also made in the hands of the assessee for assessment year 2007 - 08 to 2011 - 12. 23. The assessee preferred an appeal before the learned CIT - A challenging the order of the learned AO. Assessee contended that the i. satisfaction recorded by the assessing officer in the case of searched person was not brought on record by the AO of the assessee and only a summary was provided to the assessee. ii. impugned pen drive did not belong to the assessee since the same was neither seized from the possession of the assessee nor any of its promoters but from the residence of Mr. Joydeep Basu iii. Mr. Basu is not at all related to the assessee or an employee of the assessee iv. Provisions of Section 153C are not satisfied. v. Same addition and been made in the case of numerous assesses holding that the pen drive and data contained therein belonging to those assesses also. vi. additions are made in the hands of various assesses on protective basis and on substantive basis which are deleted by the learned CIT - A in those cases vii. Such orders of ld CIT (A) in those cases have not been challenged before the hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o not belong to the assessee as per ground number 2 and non application of mind as per ground number 3. Therefore, the assessee is also aggrieved as the learned CIT - A did not adjudicate on the legal arguments with respect to the validity of the assessment challenged before him. 26. On the merits and legal grounds ld Cit (A) held as under :- "6. The relevant portion of the AO is as under: The AO has framed-assessment. by placing reliance on the statement of the various officials recorded during search and survey operations, findings, observations of the DCIT, Central Circle - 26, New Delhi in the assessment order of Dalmia Cement Bharat ltd for the AY 2006-07 in connection with the proceedings u/s 153A of the Act in the case of the assessee company for AY 2006-07. AO observed that a pen drive was found from residence of Joydeep Basu, an employee of Dalmia Group. The said pen drive contained details of various unaccounted cash transactions. AO observations regarding it are as under: Cash Transactions:-A perusal of data contained in the pen drive reveals that it contains complete data of cash transactions, which was being maintained out of the books. It is observed that subst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perused the order of Settlement Commission dated 03.03.2015, issued -under section 245D(4), in respect of settlement application filed by S/Sh Yadu Hari Dalmia, Gautam Dalmia, Puneet Dalmia, Jai Hari Dalmia, (Directors in Dalmia group). I have also CIT-in (Central) report dated 16.05.2014, 07.07.2014 and 12.09.2014 wherein CTT-m (Central) on the basis of evidence and statement recorded during the search of key employees etc. have time and again emphasized that:- (a) the entries in cash book and 125 pages found in pen drive which was seized from the residence of Mr. Joydeep Basu, belonged to the appellant only (b) the cash of Rs. 13,75,88,000 seized from various lockers belongs to the appellant and not to S/Sh. Yadu Hari Dalmia and Gautam Dalmia and ' (c) therefore the disclosure' of Rs. 90 cr. (made by the 2 applicants namely S/Sh Yadu Hari Dalmia and Gauthm Dalmia, on the basis of entries recorded in the cash book and 125 pages found in the seized pen drive and the cash found in the lockers of employees, should not be accepted 6.1 It is noted that the Hon'ble Settlement Commission, after considering the CIT, Central (HI) various reports dated 16.05.2014, 07.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of 125 pages of the above seized pen drive of which printouts were furnished to the applicant by the department, as the applicants have compared and correlated various transactions appearing in the cash book in the seized pen drive vis-a-vis the settlement applications filed in their cases, particularly with reference to the working and basis of the unaccounted income arising from the same, which mainly constitutes the additional income offered by the above applicants before the commission.. It is true that the CIT (DR) and. the AO have brought to our notice certain transactions, particularly with reference to certain investments in shares and mutual funds made by the Dalmia group of companies, appearing in the seized pen drive, which are however, claimed to be appearing in the disclosed balance sheets of the said companies. As regards some payments appearing in the name of"JR" account, it has been mentioned by the applicants in their comments that the said transactions are figuring in the cash flow of the applicants. Similarly, various receipts appearing in different names are also stated to have been taken into account in the cash flow. It may not be out of place to mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 8.1 In the result, the appeal is allowed." 7.3 During the course of appellate proceedings, AR of the appellant further submitted that the department has not preferred any appeal against the following orders; * Order of the settlement commission dated 03.03.2015, issued under section 245D(4), in respect of settlement application filed by S/Sh. Yadu Hari Dalmia Gautam Dalmia, Puneet Dalmia, Jai Hari Dalmia (Directors in Dalmia group) * Various orders passed by CIT (A)-29 in respect of all substantive and protective additions made by AO, CC-26 on basis o f entries found in the cashbook in the pen drive seized, in the hands of Dalmia Cement Bharat Limited and Dalmia Bharat Limited. 7.3.1 It is further submitted that income tax department has accepted the finding that all the transactions recorded in cashbook found in the pen drive belong to the two promoters. Therefore, these findings have become final and absolute, the protective addition made in the hands of appellant do not survive. 7.4 During the appellate proceeding a letter dated 24.01.2019 was also sent from my office to ACIT, Circle 1(1), Tiruchirapally, Tamil Nadu, present AO of Dalmia Cement Bharat Limited and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 153C(1) of the Act and such seized assets/documents could come into the possession of the AO of the Assessee only after the recording of satisfaction by the A.O of the searched person which in the instant case is 25.03.2014 and hence the Assessment so framed u/s 153C for A.Y. 2006-07 is barred by limitation, without jurisdiction, non-est and void ab-initio." A.Y. 2007-08 That without prejudice to the primary ground raised by the Assessee earlier in its Memorandum of Cross Objections, the assessment framed by the A.O u/s 153C r.w.s 143(3) of the Income-tax Act, 1961 (the Act) for A.Y 2007-08 is beyond the scope of section 153C of the Act inasmuch as A.Y. 2007-08 is beyond the period of six Assessment Years (being A.Y. 2008-09 to A.Y. 2013-14) to be reckoned with reference to the date of receiving of the seized assets/books of account/documents by the A.O having jurisdiction over the Assessee in terms of the first proviso to section 153C(1) of the Act and such seized assets/documents could come into the possession of the AO of the Assessee only after the recording of satisfaction by the A.O of the searched person which in the instant case is 25.03.2014 and hence the Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mr. Joydeep Basu is reproduced wherein the question was asked that a pen drive was found from his possession seized by the search party and to whom this pen drive particularly belongs. In case it belongs to him what are the contents of the pen drive. In the response to that question, he categorically replied that pen drive belongs to him and it contains the data belonging to Dalmia group. He therefore submitted that whether on the basis of this pen drive proceedings u/s 153C can be initiated or not in case of the assessee. He specifically submitted that this pen drive does not belong to the assessee and therefore no proceedings u/s 153C can be initiated in the case of the assessee. Even otherwise he submitted that Shri YH Dalmia and Sri Puneet Dalmia has filed an application before the settlement commission wherein all these information contained in the pen drive are considered and a disclosure of Rs. 90 crores have been made by them. He further submitted that before the settlement commission, the detailed enquiry was conducted by the Commissioner of income tax and after that, the settlement commission has settled the matter with respect to the above pen drive in the hands of Sri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that on this count, there is no infirmity in the order of the learned CIT - A and therefore the addition could not have been made in the hands of the assessee and therefore the order of the learned CIT - A deserves to be upheld. He thuds stated that there is no infirmity in the order of the ld CIT (A) in deleting the addition on the merits of the case. 33. With respect to the challenge to the jurisdiction assumed by the learned assessing officer u/s 153C of the income tax act, submission of the ld AR is that i. He referred to detailed the date chart and submitted that on 20 January 2012 to 28 January 2012 there is a search and seizure operation u/s 132 in Dalmia group of cases and also the premises of the directors of the company along with the employees of Dalmia Bharat Enterprises Limited. The assessee was not at all covered in the search action. There was a pen drive seized from the premises of employee of another group concern Shri Joydeep Basu on 28th of January 2012. On 17th of March 2012, search operations on Dalmia group concluded. On 28th of October 2013, Shri YH Dalmia and Mr. Goutam Dalmia filed an application before the settlement commission u/s 245C offering an un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashbook submitted by the applicants with the parallel cashbook that of the impugned pen drive seized by the Department. viii. On 7 July 2014, the CIT submitted his report for verification wherein apart from challenging the treatment of certain entries in the cashbook and working filed by the applicants, no dispute was with respect to the data contained in application with the data contained in the pen drive. ix. On 16th of February 2015, the assessee filed an objection to the issuance of notice u/s 153C contending that Department has failed to prove that the impugned pen drive for the content belong to the assessee company, more so when the said pen drive was also Simultaneously alleged to be belonging to its sister concerns i.e. [1] Dalmia cement Bharat Limited and [2] Dalmia Bharat Enterprises Limited as well as [3] Mr. Joydeep Basu. x. Consequently ultimately on 30 March 2015 the assessment orders u/s 153C read with Section 143 (3) for assessment year 2006 - 07 to 2012 - 13 identical duplicating the orders already passed in case of Dalmia cement Bharat Limited for all these years was passed. xi. These additions were deleted by the learned CIT - A which is in dispute befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the assessment order passed u/s 153C of the act for assessment year 2006 - 07 and 2007 - 08 are barred by limitation and therefore the learned CIT - A is not correct in not adjudicating this issue before him. ii. For assessment year 2011 - 12 he submitted that no satisfaction is recorded by the Deputy Commissioner of income tax CC - 2 i.e. the assessing officer of the searched person for initiation of proceedings u/s 153C of the act for the said year and therefore the same is without jurisdiction. He referred to the satisfaction note recorded by the assessing officer of the searched person dated 25th of March 2014 and noted that as per para number 5 of the satisfaction note it is categorically stated that satisfaction is recorded for assessment year 2006 - 07 to 2010 - 11. He further referred to the satisfaction note dated 27th of March 2014 by the assessing officer of the assessee also. Therefore, his submission was that for assessment year 2011 - 12 on perusal of the satisfaction note dated 25th of March 2014 recorded by the assessing officer of the searched person it is clear that he has categorically excluded assessment year 2011 - 12 from his satisfaction with respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e settlement commission proceeded with the matter and ultimately accepted the disclosure made therein by the applicant. vi. settlement commission is vested with the exclusive jurisdiction to exercise the powers and perform the function of an income tax authority in relation to the matters covered by the case before it. Therefore, the learned assessing officer had no jurisdiction to utilize the impugned pen drive for recording the satisfaction in the instant case. vii. even before the assessment orders u/s 153C read with Section 143 3) for assessment year 2006 - 07 to 2011 - 12 making the impugned addition in the hands of the assessee on the basis of the content of the cash book in the seized pen drive have passed on 30/3/2015 however the settlement commission vide its final order u/s 245D (4) dated 13/2/2015 already held that the entries in the impugned cash book in the seized pen drive belonged to the applicants before the settlement commission i.e. Mr. Y H Dalmia and Mr. Gotham Dalmia and the disclosure of Rs. 90 crores made by the said applicant including the entries in the impugned cash book in the seized pen drive was full and true disclosure made by them. viii. He exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der passed in case of all these persons. Therefore e-submission was that when it is clearly held that the entries in the impugned pen drive belong to Dalmia cement Bharat Limited and having made substantial addition on the said basis in the hands of Dalmia cement Bharat Limited the learned assessing officer of the searched person could not have Simon tenuously arrived at a definite satisfaction that the entries therein belong to the assessee company. He also referred to the fact that it is not the case that was part of the data belongs to the assessee and part of the data belong to some other parties. To prove this point he submitted that the addition made in the hence of the assessee, in the hands of other parties are identical. He therefore submitted that it is not a case where the joint ownership of a particular document is shown by the revenue. He therefore submitted that mere surmises and conjectures could not take place of the satisfaction for this proposition he relied upon the decision of the honourable Delhi High Court in case of Pepsi foods private limited versus ACIT 367 ITR 112. He further referred to the satisfaction note and stated that it is clearly mentioned in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctional requirement. 38. He further contested the addition stating that the copy of the satisfaction note has recorded by the AO of searched person was not provided to the assessee despite specific request by the assessee. He stated that merely a summary thereof was provided by the AO as per letter dated 4/2/2015 he referred to the page number 22 - 23 of the paper book. He submitted that the copy of the satisfaction notice provided to the assessee only after filing the cross objection before the coordinate bench. He further submitted that despite this fact assessee responded to the letter dated 4/2/2015 of the assessing officer as per letter dated 16/2/2015 which is placed at page number 20 - 21, 22 - 23 and 24 - 27 of the paper book wherein it was specifically objected that specific noted not meet the requirement of the provisions of Section 153C of the act, the pen drive is not seized from the assessee and therefore the whereas city of the ownership of the pen drive is not known to the assessee, the documents could only belong to one person and not to the many person unless specifically proved, unless it is proved that the documents seized did not belong to the searched person t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the alleged pen drive belonged to assessee so as to justify the initiation of proceedings u/s 153C of the act for over these years. 41. He even otherwise submitted that the purported email, which is used by the learned assessing officer for recording the satisfaction, did not result in to any transaction and therefore merely for that reason it cannot be said that the pen drive belonged to the assessee. 42. He further submitted that that merely because the seized material or documents bear the name of the assessee somewhere but actually did not belong to the assessee therefore any issuance of notice u/s 153C is without jurisdiction because the provisions of Section 153C can be applied only where the particular money bullion jewelry et cetera actually belonged to the assessee. He submitted that in this case AO confused himself with the expression belongs to with the expression relates to refer to that the seized material has to be shown to be belonging to the assessee and not merely pertaining to the assessee. He relied upon the several judicial precedents on this issue of the various High Courts. Prominently among members Pepsi foods private limited versus ACIT (2014) 367 ITR 11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k of unaccounted cash transaction namely Joydeep Basu, N.K. Berry, and Sanjay Mitra & Director of the company Sh. Puneet Dalmia accepted such unaccounted transactions in their statements. iv. order of the Hon'ble ITSC is allegedly silent on the source of such unaccounted income as to show such huge income was earned by four individuals when there is allegedly a clear proof in the cashbook found in the pen-drive that such unaccounted income was generated in companies run by the group. v. He submitted that Thus, the Department, while categorically admitting that the disclosure of unaccounted income of Rs. 90 crores by the Applicant-individuals (i.e. Sri Y.H. Dalmia & Sri Gautam Dalmia) before the ITSC was made on the basis of the same cash book found in the seized pen-drive on the basis of which the impugned additions have been made in the hands of the Assessee herein, has doubted whether all the entries in the impugned cash book were considered by the Applicants in their working of additional income of Rs. 90 crores, considering the fact that the total receipts recorded in the impugned pen-drive as per the Director of the Assessee Company was Rs. 649.18 crores. In other words, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok amounts to Rs. 367 crore over the period of 6 yrs. Thus, considering the facts of the case in entirety, it is concluded that Rs. 367 crores requires to be added in the hands of DBCL, being income from undisclosed sources." Thus, he submitted that higher sums are disclosed then the amount of income contained in the data in pen drive. vii. Submitted that A.O has thus made total protective additions of Rs. 3,67,96,96,02,924/- for A.Ys 2006-07 to 2012-13 (of which A.Ys 2006-07 to 2011-12 are the years under appeal) in the case of the Assessee herein by: 1. Considering only the inflow recorded in the impugned cashbook and totally ignoring the corresponding outflow. 2. Extrapolating the figures of receipts for the years for which part data is available for arriving at the total inflow of the said years. 3. Excluding the inflow of cash from other lockers from the receipt side. viii. Referred to reply of revenue in Rule [9] before ITSC stating that :- (A) Rule 9 Report dated 15.05.2014 forwarded to the Hon'ble ITSC by the Ld. CIT(C)-III on 16.05.2014 (copy of the Rule 9 Report is enclosed at pages 692-701 of the PB) wherein: (i) At para 3.1 of the Report, reference has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(C)-III and after giving the Department an opportunity of verifying the entries recorded in the 'parallel cash book' of the pen-drive with the cash book submitted by the Applicant-Individuals (on the basis of which Rs. 90 crores was surrendered by the two Applicants) vide order u/s 245D(4) dated 13.02.2015 held as under: (i) That the entries in such 'parallel cash book' in the pen-drive seized from the premises of Sri Joydeep Basu belonged to the Applicants. (ii) That the Applicants had compared and correlated various transactions appearing in the cash book in the seized pen drive vis-à-vis the settlement applications filed in their cases, particularly with reference to the working and basis of the unaccounted income arising from the same, which mainly constituted the additional income offered by the Applicants before the Commission. (iii) That the disclosure of Rs. 90 crores made in the SOF on the aforesaid basis was thus accepted. x. He extensively referred the order of ITSC in this case and submitted that Revenue's allegation that the order of ITSC does not categorically state whether the disclosure of Rs. 90 crores by the Applicants covers all the entries in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oid of any merit as assessee is not a party before the settlement commission and only the two individuals for the petitioner's/applicant's before the settlement commission and therefore the order of the settlement commission heavily relied upon by the learned authorised representative and the learned CIT - A in his order do not apply to the assessee. The assessee cannot take shelter under the order of the learned settlement commission, as assessee is not at all a party before it. ii. The order of the settlement commission applies to the parties before it and not to the issue in these appeals. She further submitted that the provisions of Section 245 (5) and the provisions of Section 245 (D) apply only to the applicant and a specific to that assessee and not to anybody else. The company is a different entity was not in the list of the applicant before the settlement commission. iii. She further referred the page number 17 of the assessment order and submitted that annexure A - 3 is containing page number 12 125 pages which reflects the cash transactions of the Dalmia group and individual party was account position which enables control and monitoring receivable etc. She submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash book in the seized pen drive belong to the two promoters in such finding of the CIT - A - 29 has been accepted by the Department but not challenging the same in further appeal, in the protective addition in the hands of the assessee the appeal of the revenue does not survive. ii. He further submitted that when the substantive addition has been knocked down there is no reason of keeping the addition in the hands of the other party where the protective addition has been made. iii. He submitted that since the settlement commission vide its final order u/s 245D (4) dated 13/2/2015 has recorded a categorical finding that the entries in the impugned cash book in the seized pen drive belonged to the promoters of the Dalmia group in their individual capacity the same entries any income arising there from cannot be once cannot be said to belonging to assessee and taxed in the hands of the assessee u/s 153C of the income tax act. iv. He stated that the order of the settlement commission has been accepted by the revenue not challenged before any of the authority and not assailed that it is obtained by the fraud or misrepresentation etc. Therefore, the matter, which is covered in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmission and addition made in the hands of the assessee in these years. He further referred to the report of verification u/s 245D (3) dated 7/7/2014 before the settlement commission during the course of settlement proceedings. He further referred to the findings of the settlement commission in the order passed u/s 245D (4) which is placed at page number 758 - 760 of the paper book and 763 and 766 of the paper book to show that the disclosure made in the statement of facts of the applicants Mr. YH Dalmia and Sri Gotham Dalmia included 125 pages of the pen drive. vii. With respect to the claim of the learned CIT DR that the settlement commission does not refer to the name of the assessee company and therefore the assessee company is not entitled to get the benefit of the order of the settlement commission, the learned authorised representative submitted that at para number 9 of the order of the settlement commission has categorically held that the applicants have compared uncorrelated various transactions appearing in the cash book in the seized pen drive vis-a-vis the settlement application filed in the case particularly with reference to the working and basis of the unaccounted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 'belongs to' the assessee company. Thus requirement of the provisions of Section 153C is not fulfilled as learned assessing officer of the searched person has merely expressed and without any evidence. Thus additions in the hands of the assessee on protective basis have been made on defective satisfaction with respect to the pen drive belonging to the assessee and consequent assessment orders passed u/s 153C of the act are not valid v. whether the orders passed by the learned assessing officer are bad in law as those orders are passed as an ad verbatim copy, of the order in case of another assessee, i.e. Dalmia cement Bharat Limited and therefore these orders are passed without any independent application of mind. vi. Whether the assessee can take up a plea order of the settlement commission was conclusive u/s 245I of the act and where income covered in the pen drive has been accepted by the settlement commission as belonging to the four different applicants and accepting the disclosure, can now the assessing officer make the similar addition out of the same pen drive in the hands of the assessee on protective basis. vii. Whether the assessment order passed in the case of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee company and initiated proceedings u/s 153C of the act for assessment year 2006 - 07 to 2011 - 12. iv. Consequently, notice u/s 153C of the act was issued by the assessing officer for assessment year 2006 - 07 to 2012 - 13 on 31st of March 2014. v. The assessee challenged this issue before the learned CIT - A that in case of the person other than the searched person the provisions of Section 153C provides that the six assessment years to be counted from the date of receiving the books, documents or assets seized or requisitioned by the ld AO. This date is date of satisfaction recorded by ld AO of the assessee .e. on 27/03/2014. Thus, six years are to be reckoned from that date. vi. Such [6] assessment years for which assessment can be made are AY 2008-09 to 2013-14. Thus AY 2006-07 and 2007-08 are beyond the purview of assessment u/s 153C rws 153A of the Act. vii. The provision of section 153C as it stood in 2014 provides as under :- Assessment of income of any other person.2 153C.3[(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, bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... determination of the total income of such other person 82a[for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A] :] 83[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 84[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 :] ix. The Hon'ble Delhi High Court in the case of CIT Vs. RRJ Securities Ltd. [2016] 380 ITR 612 (Delhi) held at para 24 of the order that in terms of proviso to Section 153C of the Act, a reference to the date of the search under the second proviso to Section 153A of the Act has to be construed as the date of handing over of assets/documents belonging to the Assessee (being the person other than the one searched) to the AO having jurisdiction to assess the said Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. We, therefore, accept the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004-05 were outside the scope of Section 153C of the Act and the AO had no jurisdiction to make an assessment of the Assessee's income for that year." x. While rendering the aforesaid decision, the Hon'ble Delhi High Court relied upon the judgment of the Coordinate Bench of the Court in the case of SSP Aviation Ltd. v. Deputy Commissioner of Income Tax: (2012) 346 ITR 177 (at pages 72-84 of the Case laws Compilation)wherein it was held as under: "14........In case of the searched person, the date with reference to which proceedings for assessment or reassessment of any assessment year within a period of six assessment years shall abate, is the date of initiation of search under Section 132 or requisition under Section 132A. However, in case of other person such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6-A/CIT-I/TRY/2012-13, dated 19.11.2012 to Central Circle-18, New Delhi, which has subsequently been transferred to Central Circle-02, New Delhi vide order F No. CIT (Central)-III/2013-14/943, dated 18.07.2013. 3. During the course of search at the residential premises of Sh. Joydeep Basu, one of the employee of the Dalmia Bharat Enterprises Ltd. (Dalmia group of companies), a pen drive was found and seized. A perusal of data contained in the pen drive reveals that it contains complete details of inflow and outflow of the finance related to the family members and the group companies for the four financial years, i.e. F.Y. 2007-08 to F.Y 2010-11 However, for the F.Y. 2005-06, 2006-07 and F.Y. 2011-12, part details of transactions are available. After extrapolation for these financial years, the year-wise computations of the net receipts come out are as under: S. No Financial Year Assessment Year Fresh inflow of cash 1 2005-06 2006-07 22,80,39,000 2 2006-07 2007-08 22 32 39 870 3 2007-08 2008-09 19,77,19,669 4 2008-09 2009-10 59,70,62,329 5 2009-10 2010-11 97,66.34,440 6 2010-11 2011-12 80,78,23,293 7 2011-12 (up to January, 2012 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment proceedings of M/s Dalmia Cement (Bharat) Ltd (PAN AADCA9414C), it is seen that the original name of the company was M/s. Dalmia Cement (Bharat) Ltd. (PAN AAACD2281K) which was incorporated in the year 1951. On 01.04 2010, the name of the company was changed to M/s Dalmia Bharat Sugar & Industries Ltd and the whole business of Dalmia Cement (Bharat) Ltd. was transferred to this entity On 29.07.2010, the cement business of the group was transferred from Dalmia Bharat Sugar & Industries Ltd. to M/s Avnija Properties Pvt Ltd. On 31 12.2010, the name of M/s Avnija Properties Pvt. Ltd was changed to M/s Dalmia Cement (Bharat) Ltd. (PAN AADCA94HC) On perusal of the appraisal report on search initiated on 20.01.2012 in Dalmia Group of cases prepared by Dr. Vikram Singh Sharma, ADIT (lnv) Unit-VI(l), Delhi reveals that Sh. Joydeep Basu from whose premises the pen-drive was seized had -during the course of statements recorded stated that the transactions recorded in the pen-drive were out of book transactions of Dalmia Cement Bharat Ltd. On examination of the pen-drive, certain files were seen therein In these MS-xls sheet sheet path, H:/Confidentail Files/Account Files /Main Files ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi iv. Therefore, it is apparent that the assessing officer of the searched person has specifically excluded assessment year 2011 - 12 in his satisfaction. The provisions of Section 153C enables the revenue authorities to investigate into the contents of the documents seized which belongs to a person other than the person searched so that it can be asserted whether the transaction of the income embedded in the document has been accounted for in the case of the appropriate person or not. The machinery provided in Section 153C merely facilitates enquiry regarding the existence otherwise of undisclosed income in the hands of the person other than the searched person. The satisfaction of assessing officer of the person searched is only with respect to whether the specified assets belongs to the person other than the searched person and specified documents relates to the person other than the searched person. It is not necessary that AO of the searched person will also decide the assessment years for which the AO of the person other than the searched person will look into. Responsibility of the AO of the searched person is only to show that the material and the specified assets belon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are not valid. c) whether the orders passed by the learned assessing officer are bad in law as those orders are passed and back to copy of the order in case of another assessee i.e. Dalmia cement Bharat Limited and therefore these orders are passed without any independent application of mind. 55. The facts show that the pen drive seized from the premises of Sri Joydeep Basu who is an employee of the group company i.e. Dalmia Bharat Enterprises Ltd. The assessing officer of Searched person as per satisfaction note dated 25th of March 2014 has categorically recorded a satisfaction in paragraph number [6] of the satisfaction note as Under :- "6. After going through the data of the seized pen drive, I am satisfied that the contents pertaining to AY 2006-07. 2007-08, 2008-09. 2009-10 and 2010-11 belong to the company M/s Dalmia Bharat Sugar & industries Ltd As the company is assessed to tax with you, notice u/s 153C of the Income tax Act, 1961 may kindly be issued in the case of M/s Dalmia Bharat Sugar & Industries Ltd." 56. Even before the satisfaction is recorded by the assessing officer of the searched person one Shri YH Dalmia and Sri Gautam Dalmia, the directors and promoter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the said applicant including the entries in the impugned cash book in the seized pen drive was 'full and true'. Thus, it is apparent that one of the income tax authorities has already held that the pen drive belongs to the applicants and the income containing wherein is only to the extent of Rs. 90 crores. Even despite this, the learned assessing officer of the searched person has recorded satisfaction that the content of the pen drive 'belonged to' the assessee. The order of the settlement commission, which is placed before us in paragraph number 9, has accepted the above disclosure containing 125 pages of the pen drive data. The learned assessing officer of the searched person has recorded the satisfaction that these data belongs to the assessee company. We find that the satisfaction of the higher forum that is the settlement commission will naturally prevail over the opinion of the learned assessing officer of the searched person. This is also because before the settlement commission the revenue is also represented by highest officials and gives its own report with respect to the disclosure made by these persons after detailed investigation about leakage of any income. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive belonged to Dalmia cement Bharat Limited and made substantive additions of the alleged inflow (after extrapolation) recorded in the cash book contained in the said pen-drive in the hands of Dalmia cement Bharat Limited for A.Ys 2006-07 to 2012-13. The Ld. DCIT, CC-2 also made similar protective additions in the hands of the other searched entities i.e. (i) Dalmia Bharat Enterprises Ltd & (ii) Sri Joydeep Basu. The learned authorised representative also produced Copies of Assessment Orders passed u/s 153A/143(3) of the Act in the cases of Dalmia Cement Bharat Limited, Dalmia Bharat Enterprise Limited & Sri Joydeep Basu for A.Ys 2006-07 to 2011-12, which are placed at pages 120 to 537 of the paper book. Thus, having clearly held that the entries in the impugned pen-drive belonged to Dalmia cement Bharat Limited which is one of the persons covered in the inter-connected search actions under his jurisdiction and having made substantive additions on the said basis in the hands of Dalmia cement Bharat Limited, the Ld. DCIT, CC-2 could not have simultaneously arrived at a definite conclusion / satisfaction that the entries therein 'belonged' to Assessee Company. It is surprising that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the AO of the searched person dated 25th of March 2014 does not display any reason or material or any basis for conclusion that the pen drive does not belong to the searched person but to the assessee. Both the satisfaction note of AO of the person searched and AO of the assessee are reproduced above in the satisfaction note he has clearly mentioned that the pen drive reveals that it contains complete details of inflow and outflow of the finance related to the family members in the group companies for the four financial years. Thus, he specifically mentions that the data related to the family members and the group companies and not has specifically referred the name of the assessee company. He does not also mention the reason that why that pen drives did not belong to the person searched. Such a satisfaction definitely suffers from some infirmities. 61. The AO of the assessee has recorded a satisfaction that there is an email from one Mr. Sanjay Mitra dated 24th of March 2011 in the pen drive where there was a proposal of transactions of shares. Based on this the AO held that the contents of the mail, accounts et cetera as seen in the pen drive and mentioned in the satisfacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held by GFL i.e. OCL and therefore this pen drive also belongs to OCL. Further, the transaction has not at all taken place it is merely a proposed transaction. If there would have been a buyback, it would have been reflected in the books of accounts of the assessee company, as well as the shareholder. No such evidences are brought on record and the learned authorised representative has stated that there is no such transaction, which is taken place. Further, in the remand report of the assessing officer, which is placed, on record dated 5 October 2010 has categorically says that there is no such buy back of the shares. This statement made by ld AO in remand report based on the information obtained from SEBI, which has clearly stated that no such buy back has taken place. Report of SEBI is also the part of the remand report of ld AO. Therefore there is a categorical admission of the AO that there is no such transaction which is taken place, the only email found where the name of the assessee is mentioned, it cannot be held that the entry belongs to the assessee from which this mail was found. 65. It is further to be seen that the pen drive was seized from the possession of one Mr. J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific finding that the impugned material or the seized assets belong to the assessee. He submitted that the phrase 'belong to' the assessee is equivalent to 'income has escaped' the assessment u/s 148 of the act. Both are definite finding. The argument is that if the assessing officer is in 'doubt' in both the cases, he cannot resort to this Section. Clearly, in the case, the learned assessing officer has made a 'protective addition' in the hands of the assessee and 'substantive addition' in the hands of Dalmia cements Bharat Limited. This clearly shows that the learned assessing officer is clearly 'in doubt' about 'belonging' - of the pen drive as well as the content of the income in the data contained in that pen drive with respect to the assessee in whose hands it is to be charged. Thus it is clear that the recourse to the provisions of Section 153C has been made by the learned assessing officer despite he being 'in doubt' and merely to take care of a contingency that whereas in future upon the deletion of the corresponding 'substantive addition' in the hands of the other assessee. This is also supported by the decision of the honourable Delhi High Court in case of PepsiCo ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the different assessee. Thereafter he held that he is in total agreement with the findings in the case of Dalmia cement Bharat Limited and makes an addition on identical basis on protective basis in the hands of the assessee company i.e. Dalmia's Bharat sugar industries Ltd. This is a clear indication that the assessing officer of the assessee has not applied his independent mind to the various facets and the facts and evidences collected during the course of the search that whether they belong to the assessee or the income contained therein is to be taxed in the hands of the assessee. Such a vague satisfaction coupled with borrowed satisfaction in the assessment order itself demonstrates non-application of mind by the AO and complete reliance on the opinions and findings of another officer. This clearly shows that the learned assessing officer has clearly abdicated responsibility, which is cast on him to determine whether the receipt is income and is taxable in the hands of the assessee only or not. This also suffers from a basic inherent defect that the decision is been taken by somebody else and which is accepted by the learned assessing officer without any independent appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comprised in those documents chargeable to tax in the hence of those four applicants accepting the amount of disclosure made by them. Further question number [4] he also answered that the satisfaction recorded by the assessing officer of the person searched does not fulfill the requirement of provisions of Section 153C of the act as it is a defective satisfaction for the reasons given above. Issue number [5] that the assessment order framed u/s 153C read with Section 143 (3) for assessment year 2006 - 07 to 2011 - 12 in case of the assessee are ad verbatim copies of the orders of the learned Deputy Commissioner of income tax, central circle - 2 in the case of Dalmia cement Bharat Limited and therefore there is no application of independent mind by the learned assessing officer on the facts and the materials available before him while taxing the income in the hands of the assessee on protective basis. Therefore the consequent assessment order passed u/s 153C of the act for assessment year 2006 - 07 to 2011 - 12 are also not sustainable in law. 70. Now we go to the question number [6] that Whether the assessee can claim that order of the settlement commission was conclusive u/s 245 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment does not have any authority to challenge that this income is 'belonging to' and chargeable to tax in the hands of different person than the four applicants before the settlement commission. 71. We have carefully analyzed the arguments of the learned authorised representative, which at first instance looks forceful and convincing. However when looked into the provisions of Section 245I, we are of the opinion that it gives the protection to the applicants before the settlement commission only that such matter cannot once again be taxed in the hands of only those four applicants in different proceedings for the same assessment year or in different assessment years. According to us, the provisions of Section 245I does not give protection to the whole world with respect to the 'matter' as decided by the settlement commission, it only protects those applicants who are before the settlement commission. Therefore, this proposition raised by the learned authorised representative stands rejected. 72. Issue number [7] that arises before us is Whether the assessment order passed in the case of the assessee on 'protective basis' is sustainable because identical 'substantive and protec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al) report dated 16.05.2014, 07.07.2014 and 12.09.2014 wherein CIT-III (Central) on the basis of evidence and statement recorded during search of key employees etc. have time and again emphasized that:- (a) the entries in cash book and 125 pages found in pen drive which was seized from the residence of Mr. Joydeep Basu, belonged to the appellant only. (b) the cash of Rs. 13,75,88,000 seized from various lockers belongs to the appellant and not to S/Sh Yadu Hari Dalmia and Gautam Dalmia and (c) therefore the disclosure of Rs. 90 cr. (made by the 2 applicants namely S/Sh Yadu Hari Dalmia and Gautam Dalmia, on the basis of entries recorded in the cash book and 125 pages found in the seized pen drive and the cash found in the lockers of employees, should not be accepted. 6.2 It is noted that the Hon'ble Settlement Commission, after considering the CIT, Central (III) various reports dated 16.05.2014, 07.07.2014, 12.09.2014 and 17.09.2014 and also after giving the department the opportunity of verifying the entries recorded in cash book and 125 pages found in the pen drive with the cash book (on the basis of which Rs. 90 cr. was surrendered by the 2 applicants) held that both ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs in Dalmia group) and appellate orders passed by CIT(A)-29, Delhi in the other cases of Group Companies, I find that entries in the cash book found in the pen drive does not belong to the appellant. As in the appellant's hand only protective addition is made and substantive addition made in the case of Dalmia Cement (Bharat) Ltd. has already been deleted by CIT(A)-29, Delhi, therefore, following the order of Ld. CIT(A), the addition of Rs. 22,80,39,000/- is not sustainable. Therefore the addition made in the appellant's hand is deleted." 76. Further while allowing the appeal of the assessee the learned CIT - A in the case of the assessee also enquired from the revenue whether any appeal has been filed against the order of the learned CIT - A - 29 in appeal of the assessee in whose hands substantive additions are made. As per letter dated 31/1/2019 written by Asst Commissioner of income tax, Circle - 12 the learned CIT - A confirmed that no second appeal has been preferred by the revenue against the order of the learned CIT (A) - 29 in the case of Dalmia cement Bharat Limited. During the course of hearing before asked we have also asked the revenue is that whether any appeal has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old order of ld CIT [A] deleting additions. 79. The last question no [9] in this set of appeals and CO is that Even otherwise, it is presumed that pen drive belongs to the assessee, manner of protective addition in the hands of assessee is correct, jurisdiction u/s 153C is correctly assumed in the case of assessee, despite deletion of substantive addition, still whether the disclosure made before ITSC covers the amount of data involved in the pen drive. For this, we have perused the various replies and counter replies made before the ITSC by the parties and findings of ITSC on that. 80. On perusal of order of ITSC, we find following observations :- "6.3 Further hearings were held u/s 245D(4) in the above matter on various dates and the issues raised in Rule 9 report and Report(s) u/s 245D(3) by the CIT and the reply by the applicants thereon were discussed at length during the course of these hearings. The necessary verification on the issues mentioned in the Rule 9 and 245D (3) reports were carried out with reference to replies of the applicant, by the Commission and in respect of the unresolved issues, the Commission issued the following directions: ......The Department to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments. It is noteworthy that against receipts of Rs. 369,20,85,030 for the period 2009-10 to 1 July, 2011, there is corresponding payment of Rs. 369,20,36,883 (refer to page-12 of Rule-6 Report) thus reflecting a net surplus of Rs. 48,147/- only. If the department is considering these to be business transactions, the natural corollary is that the net surplus of Rs. 48,147/- can only be considered as income..... 9..........As mentioned in para 4.2 above the applicants have owned up the contents of the seized pen drive consisting of 125 pages and these pages were directed to be given to the applicants. It is also stated that the applicants are not aware in whose presence the pen drive was found at Sri Joydeep Basu's residence..... ....However, we cannot ignore or brush aside the explanations/ clarifications furnished by the above applicants, particularly in respect of 125 pages of the above seized pen drive, of which printouts were furnished to the applicant by the department, as the applicants have compared and correlated various transactions appearing in the cash book in the seized pen drive vis-à-vis the settlement applications filed in their cases, particularly with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s recorded in the parallel cashbook of Rs. 495 crores was much higher than the amounts disclosed by the four family members and hence the undisclosed income of the group should be Rs. 495 crores. ITSC Considered that revenue had estimated the undisclosed income of the group at Rs. 495.36 crores by considering only the receipt side in exclusion of the payment side of almost matching amount of the alleged parallel cashbook. If the receipts were considered as income, the payments were required to be considered as expenses on the same logic. v. Further actual receipts considered by the Applicants in their working of undisclosed income based on the details available with them was much higher i.e. Rs. 649.18 crores. vi. printout of the alleged parallel cashbook and other seized materials as given by the Department were analyzed by the Applicants with reference to their workings. Each entry mentioned in the alleged parallel cashbook & other seized material were correlated by the Applicants with their working of undisclosed income, which proved that the Applicant's disclosure was full and true. vii. ITSC further after considering the various Reports of the CIT and the replies of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
