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TMI Blog2023 (1) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... e, both the parties argued it together and those are disposed of by this common order. 02. ITA No. 7601/MUM/2019 is filed by the DCIT CC-2(2) Mumbai (the ld. AO) for A.Y. 2010-11 against the order of the CIT(A)-48, Mumbai (the ld CIT-A) and ITA No. 7683/MUM/2019 for the same A.Y. is filed by the Spaciality Paper Ltd (the Assessee) against the same appellate order. 03. In ITA No. 7601/MUM/2019 the ld. AO has raised following grounds of appeal stating that ld CIT (A) is not correct in holding : 1. On the facts and circumstances of the Appellant s case and in law the ld. AO erred in passing ex-parte order by invoking the provisions of Sec. 144 of the Income Tax Act, 1961 without providing reasonable opportunity of being heard. 2. On the facts and circumstances of the appellants case and in law the Learned Assessing Officer erred in rejecting the book results u/s. 145(3) of the Income Tax Act, 1961. 3. On the facts and circumstances of the Appellant s case and in law the ld A.O. erred in estimating the gross profit at the rate of 28% amounting to ₹ 31,38,34,088/- as per para 13 of the impugned order. 4. On the facts and circumstances of the Appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... count of unexplained cash credit on the ground or grounds as stated in the Appellate order or otherwise. 05. Briefly stated the fact for A.Y. 2011-12 shows that search took place u/s. 132 of the Act in case of Reliable Paper (India) Ltd. and its group concerns from 23.02.2010 to 28.04.2010. Subsequently, notice u/s. 142(1) of the Act dated 19.11.2012 was issued to the assessee which was not responded to. However, the fact shows that assessee has filed original return of income u/s. 139 of the Act on 19.07.2011 at ₹Nil. Several further notices were issued which were not complied with. Therefore, the AO issued show cause notice to complete the assessment u/s. 144 of the Act. Even that notice was not complied with. 06. Then, the LD AO proceeded to complete the assessment. The ld. AO noted that assessee is a dealer in papers and has incurred losses of ₹6,75,42,733/-.Further, assessee has carried forward losses of ₹8.39 Crores. The ld. AO examined balance-sheet and profit and loss account of the assessee and in absence of any information with respect to the raw material consumed and expenditure incurred as well as the stock statement and books of accounts, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e ld. AO is aggrieved with the action of the ld.CIT (A) in reducing the gross profit from 28%-25% and deletion of addition of ₹ 10 Lacs, is in appeal before us. 011. Assessee is aggrieved with the order of the ld.CIT (A) on the ground that the assessment should have been made u/s. 153C of the Act. The order u/s. 144 is not valid, rejection of the books of accounts is not good and further the confirming of unexplained cash credit of ₹ 10,43,10,79/- is also not good. 012. As main ground in appeal of assessee is a jurisdictional ground that the order should have been passed u/s. 153 C of the Act, we take up appeal of the assessee first. 013. As per Ground No. 1 assessee challenged that the assessment should have been u/s. 153C of the Act. The impugned assessment order is passed u/s. 144 of the Act, therefore same is invalid. 014. The ld. AR relied on the decision of the Hon‟ble Delhi High Court in case of PCIT Vs. Sarvar Agency Pvt. Ltd. as well as the decision of the co-ordinate bench in ITA No. 7682 and 7680 in case of Global Paper Impex A dated 22.09.2022 on the similarly issued where on the identical facts and circumstances the assessment passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the both the parties in assessment of the assessee u/s. 153C of the Act for earlier year. 017. Identical issue has been decided in ITA No. 7682/MUM/2019 and 7680 and 7603/MUM/2019 for A.Y. 2011-12 by the co-ordinate bench by order dated 22.09.2020 in case of Global Paper Impex Pvt Ltd wherein also on the same search and on the basis of notice u/s. 153(C) issued in earlier years on the same date i.e. 19.11.2012, the co-ordinate bench quashed the assessment framed b y the ld. AO u/s 144 of the Act holding as under:- 3. Briefly stated facts necessary for adjudication of the controversy at hand in all the aforesaid appeals are: on the basis of search and seizure operation carried out in case of Reliable paper (I) Pvt. Ltd. and its group company, Mumbai during the period 23.02.2010 and 20.04.2010 notice under section 142(1) of the Income Tax Act, 1961 (for short the Act‟) dated 19.11.2012 was issued and served upon the assessee. However, assessee has not filed the return of income in response to the notice under section 142(1) of the Act. Then notice under section 142(1) dated 11.01.2013 along with questionnaire was issued and duly served upon fixing the next date as 23. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also not in dispute that assessment made by the AO in case of assessee for A.Y. 2004-05 to 2009-10 under section 153C have been deleted on the ground that the same did not arise out of any seized material. It is also not in dispute that on 19.11.2012 assumed date for recording satisfaction of the assessment for A.Y. 2010-11 was not pending and notice under section 142(1) was issued whereas no notice under section 143(2) has ever been issued. It is also not in dispute that addition in this case for both the years is not based upon any seized material. It is also not in dispute that on 19.11.2012 A.Y. 2011-12 was pending and notice under section 143(2) was issued on 24.09.2012 meaning thereby assessment abates and notice under section 153C of the Act was required to be issued. 8. In the backdrop of the aforesaid facts and circumstances of the case the Ld. A.R. for the assessee raised legal ground that the assessment for both the years i.e. A.Y. 2010-11 and 2011-12 was required to be framed under section 153C of the Act and not under section 144 of the Act as has been done by the AO and relied upon the decision rendered by co-ordinate Bench of the Tribunal in case of Shri Me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach of the captioned assessment years under section 153C of the Act dated 19.11.2012. 13. Furthermore, during the assessment proceedings the Ld. CIT(A) called upon the AO to bring on record the satisfaction note recorded in these cases, to which AO informed by way of letter dated 18.03.2016, DCIT/CENT.CIR.2(2)/Rem./2015-16 which is part of the judicial record that as regards satisfaction note, a reference may be drawn to the assessment order wherein the AO has mentioned that, the satisfaction was drawn before initiating the proceedings u/s 153C. Sir, it may further be appreciated that this records were originally lying on 8th floor of this building. Thereafter records were shifted to 11th floor due to renovation on 8th floor. Further after restructuring records were again shifted to 8th floor. In this process, the satisfaction note appears to have been misplaced. I rely on the provision of section 292B and 292BB of the Income Tax Act, 1961. Therefore it is submitted that notice u/s 153C is properly issued and served on the assessee. 14. The onus to prove the date of recording of the said satisfaction note by the AO was on the Revenue which they have failed to discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pertains or pertain to, or any information contained therein, relates 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 notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person 17[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 : 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 subsection (1) of section 153A shall be construed as reference to the da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. In the instant case, undisputedly, originally assessment proceedings were initiated against the present assessees u/s 153C read with section 153A of the Act which was completed vide order dated 30.12.2011 but the same were annulled by ld. CIT (A) vide order dated 28.08.2012 on the ground that proper course in this case was to initiate proceedings u/s 147 of the Act and make assessment accordingly. The said assessment u/s 153C read with section 153A was completed on the basis of some seized material/document LP-103 A-1 pages 30, which is a memorandum of understanding alleged to have been entered into between the assessees and M/s. R.B. Enterprises. 18. So, we are of the considered view that when provisions contained u/s 153C are applicable in this case to initiate assessment proceedings on the basis of seized material seized in case of some third party, notice issued u/s 148 of the Act and subsequent assessment framed u/s 147 of the Act is void ab initio and as such, assessment framed u/s 147/143(3) of the Act is liable to be quashed. 16. Not only this 1st and 2nd proviso to section 153C and 153A of the Act make it clear that the AO acquires jurisdiction on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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