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TMI Blog2022 (12) TMI 674X X X X Extracts X X X X X X X X Extracts X X X X ..... Anjali Aniruddha Malpani, both, being doctors by profession holding post of director and involved in the control & management of Malpani Infertility Clinic Private Limited (hereinafter referred to as 'the Company') a private limited company. For all the assessment years before us, the assessments were framed on both the assessees under Section 153C read with Section 143(3) of the Income Tax Act, 1961 [hereinafter referred to as 'the Act'] sequent to a search conducted on the Company under Section 132 of the Act on 26.11.2015. These appeals were heard together as they involved identical issues arising from common factual matrix and are, therefore, being disposed by way of common order. ITA No. 3924/Mum/2019 (Assessment Year 2010-11) filed by the Assessee (Dr. Aniruddha Narayan Malpani) 2. By way of the present appeal the Assessee (i.e. Dr. Aniruddha Narayan Malpani) has challenged the order, dated 29.03.2019, passed by the Commissioner of Income Tax (Appeals)-51, Mumbai [hereinafter referred to as 'the CIT(A)'] for the Assessment Year 2010-11 partly allowing the appeal filed by the Assessee against the Assessment Order, dated 27.12.2017 for the Assessment Year 2010-11. 3. The As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by profession, filed return of income for the relevant assessment year on 30.07.2010 declaring total income of INR 1,55,03,435/. Subsequently, a search was conducted under Section 132 of the Act on 26.11.2015 at Malpani Infertility Clinic Private Limited (hereinafter referred to as 'the Company'). During the aforesaid search on the Company jewellery of INR 90,51,925/- was found out of which jewellery of INR10,17,015/- was seized. 5. Notice, dated 03.10.2017 was issued to the Assessee under Section 153C of the Act. In response to the aforesaid notice, the Assessee submitted that the original return filed by the Assessee be treated as returned filed in response to notice under Section 153C of the Act. Assessment under Section 153C read with Section 143(3) of the Act was framed on the Assessee vide order, dated 27.12.2017, determining total income of the Assessee at INR 1,82,59,890/- after treating Short Term Capital Gain of INR 53,05,487/- and Long Term Capital Loss of INR 23,50,550/- arising from share transactions as business income/loss. No addition was made in the hands of the Assessee in respect of jewellery found/seized during the course of search in the Company. 6. Being agg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suggest that the jewellery found/seized had a bearing on the determination of any specific assessment year, the aforesaid condition was not satisfied and therefore, the satisfaction recorded in terms of Section 153C of the Act is bad in law making the entire proceedings and the assessment order a nullity in law. To support the aforesaid contention, the Learned Authorised Representative for the Assessee referred to the provisions of Section 69A of the Act and submitted that in the fact of the present case the Assessing Officer could have only made additions in the year of search in case the Assessee had failed to provide explanation regarding source of jewellery. Highlighting the fact that the addition on account of unexplained portion of jewellery was made in the hands of the Company and not in the hands of Assessee, the Learned Authorised Representative for the Assessee moved to the next leg of his argument. Relying upon the judgments of the Hon'ble Bombay High Court in the case of Hindustan Lever Ltd. Vs. ACIT: 268 ITR 332 (Bom) rendered in the context of reopening of assessment under Section 147/148 of the Act, he submitted that nothing can be added or deleted from the satisfac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertaining to Section 147 of the Act, which were relied upon by the Ld. Authorised Representative for the Assessee, cannot be applied to proceedings under Section 153C of the Act. 10. Responding to the submissions advanced by the Ld. Departmental Representative, the Ld. Authorised Representative for the Assessee submitted that 'reasons to suspect' pose a lighter burden on the Revenue as compared to 'reasons to believe' or 'satisfied'. Nothing prevented the legislature from using expression 'reasons to suspect' in Section 153C of the Act instead of 'satisfied'. In this regard, he relied upon the judgment of Hon'ble Bombay High Court in the case of German Remedies Ltd. vs. DCIT : 287 ITR 494 rendered in the context of reopening of the assessment under Section 147 of the Act. He further submitted that the Ld. Departmental Representative has misplaced reliance on non-obstante clause contained in Section 153C of the Act which only provides that once a search was conducted there was no requirement to resort to the provisions of Section 147 of the Act as the Assessing Officer was free to undertake proceedings under Section 153A to 153D of the Act. 11. We have considered the rival submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assets seized has a bearing on the determination of the total income of the Other Person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted and for the relevant assessment year or years referred to in Section 153A (1) of the Act. At the threshold, satisfaction that is required to arrive at is that the seized material belongs to the Other Person and that it has a bearing on determination of total income of the 6 assessment years preceding the year of search. In our view, the satisfaction arrived at the threshold by the Assessing Officer cannot be equated to the final determination to be made after going through the assessment/reassessment as per Section 153A read with Section 143(3) of the Act. 13. The Ld. Authorised Representative for the Assessee has challenged the satisfaction recorded for the reasons that the assessing officer of the assessee (who is also the assessing officer of the Company) had, after recording satisfaction on 03.10.2017, raised queries and sought for explanation from the Company about the jewellery seized and this, according to the Ld. Authorised Representative for the Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. Authorised Representative for the Assessee had placed reliance on the judgment of the Hon'ble Bombay High Court in the case of CIT vs. Jet Airways (I) Ltd. 331 ITR 236, wherein it has been held that if after issuing a notice under Section 148 of the Act, the assessing officer holds that the income in relation to which he had formed a reason to believe had escaped assessment, has as a matter of fact not escaped assessment, it was not open to the assessing officer independently to assess some other income. Relying upon the aforesaid judgment, the Ld. Authorised Representative for the Assessee had contended that no addition could have been made in the hands of the Assessee in the assessment order passed under Section 153C/143(3) of the Act as no addition has been made in the hands of the Assessee in respect of jewellery found/seized during the course of search in respect of which satisfaction was recorded in the satisfaction note dated 03.10.2017. We note that in the case of Jet Airways (I) Ltd. (supra), the Hon'ble Bombay High Court had referred to Memorandum Explaining the Provisions of Finance (No. 2) Bill of 2009 for interpreting meaning of expression 'and also' used in Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Section 143(3) of the Act. The contention raised on behalf of the Assessee that no addition can be made in assessment framed under Section 153C of the Act where no addition has been made qua the item for which the satisfaction under Section 153C of the Act was recorded (i.e., jewellery) by placing reliance on the judgment of the Hon'ble Bombay High Court in the case of Jet Airways (I) Ltd. (supra) is, therefore, rejected. 16. During the course of the hearing, the Learned Authorised Representative for the Appellant had, relying upon paragraph 18 of the judgment of the Hon'ble Supreme Court in the case of Sinhgad Technical Education Society (Supra), contended that since the Assessing Officer, at the stage of recording satisfaction mandated by Section 153C of the Act, had not established co-relation between the incriminating material and relevant assessment year, the satisfaction was liable to be quashed. We note that the expression 'incriminating material' has not been used in Section 153C of the Act. In our humble view, while examining the scope of additions that can be made in case of completed/un-abated assessments, the Hon'ble Supreme Court as well as the Hon'ble Jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that notice in respect of the Assessment Years 2000-01 and 2001-02 was time barred. However, in view of our aforementioned findings, it is not necessary to enter into this controversy." In the above case, the incriminating material seized during the search pertained to particular assessment years. There was a clear factual finding by the Tribunal that the incriminating material belonged to Assessment Year 2004-05 and thereafter. Taking note of the aforesaid factual finding by the Tribunal, the Hon'ble Supreme Court concluded that since the incriminating documents did not pertain to four assessment years, no addition could be made in these four assessment years. While it is one thing to contend that the incriminating material pertained to, say, assessment year-x and therefore, in absence of any other incriminating material no additions could be made in assessment year-y, whereas it is entirely different to contend that in case the incriminating material found during search could not be co-related with any specific assessment year at the time of recording satisfaction under Section 153C of the Act, the recording of satisfaction and the subsequent search assessment proceedings and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that specific queries regarding jewellery found during search, capital gains arising from sale of plot at Pune, income arising from sale of shares in off-market transaction to Mr. Viren Gandhi, Chartered Accountant and share transaction carried by the portfolio managers were put to the Assessee which constituted incriminating material and formed the subject matter of additions made by the Assessing Officer for various assessment years. Per contra, the Learned Authorised Representative for the Assessee submitted that a statement does not become incriminating merely because of the questions posed. It is the reply to the questions posed which has to be considered for determining whether there is anything incriminating in the statement recorded. He asserted that there was nothing incriminating in the replies given by the Assessee. He vehemently contended that there was no incriminating material to support the additions made by the Assessing Officer and highlighted the fact that no additions were made in the hands of the Assessee in relation to jewellery found during the course of search and therefore, he submitted that the additions made by the Assessing Officer be deleted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ings/conclusion in appeal for the Assessment Year 2010-11 shall apply mutatis mutandis to the respective grounds raised in these appeals. Accordingly, the common order, dated 29.03.2019, passed by the CIT(A) for the Assessment Years 2011-12 to 2014-15 is, therefore, set aside and the additions made by the Assessing Officer in the respective assessment order, dated 27.12.2017, for each of the aforesaid assessment years passed under Section 153C read with Section 143(3) of the Act are deleted. In view of the aforesaid, appeals filed by Dr. Aniruddha Narayan Malpani for Assessment Year 2011-12 to 2014-15 (ITA No. 3925, 3926, 3927 & 3928/Mum/2019) are partly allowed. ITA No. 3917 to 3921/Mum/2019 (Assessment Year 2010-11 to 2014-15) filed by the Assessee (Dr. Anjali Aniruddha Malpani) 23. Similarly, in identical facts and on identical line of reasoning, the additions made in the hands of Anjali Aniruddha Malpani by the Assessing Officer for the Assessment Year 2010-11 to 2014-15 vide separate assessment orders passed on 27.12.2017 under Section 153C read with Section 143(3) of the Act are also deleted in absence of any incriminating material found during the course of search. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X
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