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TMI Blog2023 (4) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... ment year 2011-12 vide Annexure-C. 2. Heard learned standing counsel Sri K.V. Arvind for appellant / revenue and the learned counsel Shri Mayank Jain for respondent/assessee. Perused the order passed by the Deputy commissioner of Income Tax Central Circle-1(3), Bangalore in respect of assessment order and the order passed by the Commissioner of Income Tax (Appeals)- VI, Bangalore dated 25.08.2014. 3. The factual matrix of this appeal are as under: It is stated in the statement of fact that under Section 132 of the Income Tax Act, 1961 carried out in the case of Sri K. Raghuvacharyulu, Smt. Renuka.G and others on 25.10.2010 certain documents belonging to the assessee was found and seized. Consequently, based on the said evidence, the assessing officer of the searched person recorded the satisfaction note in the case of Gali Janardhan Reddy and issued notice under Section 153C for the assessment year 2005-2006 to 2010-2011 and notice under Section 143(3) for the assessment year 2011-2012. It is further stated that the assessment proceedings under Section 153C read with Section 144 of the Act were concluded for the assessment year 2005-06 to 2010-11 and under Section 144 read with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arent from the record. But the Tribunal dismissed the Revenue's contention by solely relying on the decision of Delhi High Court in the case of M/s. RRJ Securities Ltd. Hence, this appeal is preferred by the Revenue / Appellant among the grounds urged therein and seeking for intervention. In view of the grounds urged in this appeal preferred by the Revenue the following substantial questions of law would arise for response to the same: (i) Whether on the facts and circumstances of the case, the Tribunal is right in law in holding that the assessment year relevant to the financial year in which the satisfaction note is recorded under Section 153C of the Act will be taken as the year of search for the purposes of clause (a) and (b) of sub-section 1 of Section 153A by making reference to first proviso to sub-section 1 of Section 153C despite the fact that this first proviso to subsection 153C refers to the second proviso to sub-section 1 of Section 153A specifically and hence, is not applicable at all to all the clauses (a) and (b) of sub-section 1 of Section 153A of the Act? (ii) Whether on the facts and circumstances of the case, the Tribunal is right in law in setting aside as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed for the year assessment year 2011-12 holding that there is no satisfaction recorded by the assessing officer of the searched person (153A) in the file of the said person ignoring the intention of legislature and even when the assessing authority has passed assessment order after recording satisfaction as required under Section 153C of the Act. Therefore, the appellant/Revenue in this matter raising all these grounds and also substantial questions of law relating to the order passed by the Tribunal. On all these premises the learned standing counsel is emphatically submitting that intervention of this Hon'ble Court is needs, if not, certainly there shall miscarriage of justice to the Revenue being arraigned as appellant in this appeal. 8. It is further contended by counsel for the appellant keeping in view the notice under Section 142 (1) which was issued on 21.12.2012 calling for the return of income for assessment year 2011-2012. In response to the aforesaid notice, respondent/ assessee filed a letter dated 28.12.2012, which was received on 01.01.2013, in which the assessee has stated that CBI has seized all the relevant material, including the books of accounts, during Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; Balance Tax 7,26,04,186 Add: Interest u/s234A 1,30,68,753-235B -1,59,97,806 2,90,66,559 Total Tax 10,16,70,745 Less: 140A paid 2,00,00,000 Net Amount Payable 8,16,70,745 11. It is further contended by the standing councel for the appellant /Revenue that against the order passed by the Deputy Commissioner of Income Tax, Central Circle 1(3), Bangalore dated 31.03.2013 an appeal was preferred before the Commissioner of Income Tax (Appeals) - VI wherein the appellate order and ground of decision was passed. The assessments under Section 153C read with Section 144 of the IT Act for assessment years 2005-06 to 2010-11 and under Section 154D read with Section 144 for the assessment year 2011-12 were completed following search and seizure action under Section 132 of the IT Act carried out in the case of Sri Madhu, Smt.Renuka, Sri Raghavacharyulu and others on 25.10.2010. 12. These are all the provision that has been appraised by the learned standing counsel Sri K.V. Arvind for the Revenue/appellant. It is stated that the proceedings initiated under Section 153C are therefore in order and in accordance with law, and the same are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sufficient opportunity) or during the course of appeal, the findings of the assessing officer and the inference drawn do not deserve any interference and therefore, the assessment made is in order and is upheld. In the result, the appeals for all the assessment years in equation are dismissed. This order has been passed by the Commissioner of Income Tax (Appeals) - VI, Bangalore. The same is also appraised by the learned standing counsel Sri K.V. Aravind by referring to the aforesaid provision and also seeks for intervention of this Court, if not, there will be miscarriage of justice to the appellant / Revenue. 17. The Assessee namely Smt. G. Lakshmi Aruna preferred appeals against the combined order of CIT(A) - VI, Bangalore dated 25.08.2014 for the assessment years 2005-06 to 2011-12 before the Income Tax Appellate Tribunal, Bangalore Bench 'B' Bangalore in ITA No. 1451 to 1457 (Bang) 2014 (Assessment years 2005-06 to 2011-12). The assessee has objected to the validity of the assessment order passed under Section 153C read with Section 144 of the IT Act. In the appeal serious objection raised with respect to initiation of proceedings under Section 153C of the I.T. Act by conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al matters. This contain instruments of partnership deed entered on 8.1.2006 between Sri B.Srinivas Reddy, Sri Parameshwara Reddy, Sri B.Sreeramulu, Sri G Karunakar Reddy, Sri Somashekar Reddy, Smt. G. Lakshmi Aruna in the name and style of Hotel Nagarjun. A search under Section 132 was also conducted on 25.10.2010 in the case of Smt. G. Renuka at 'Rishikesh'. Wherein it is indicated that these pages contain trial balance of Gali Janardhana Reddy for the financial year 2009-10. Accordingly, being satisfied that the documents and book account belonging to Gali Janardhana Reddy have been found and seized from the searched premises of Sri Raghavacharyulu and Smt. G. Renuka. Notice was issued under Section 153C of the Income Tax Act, 1961. These are all the contentions made by learned standing counsel Sri K.V. Arvind referring to the aforesaid provisions and also various grounds. It is observed that before initiating proceedings under Section 158BD of the Act, the assessing officer who has initiated proceedings for completion of the assessments under Section 158BC of the Act should be satisfied that there is an undisclosed income which has been traced out when a person was searched und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue. The substantial questions of law requires to be considered in a given facts and circumstances of the case. Therefore, learned standing counsel Sri Arvind K.V. emphatically and also forcefully submitting that impugned orders as per Annexures-C and D may be set-aside. 20. Apart from the contentions, the learned standing counsel has also filed written submission contending that the search under Section 132 was conducted on 25.10.2010 in the case of Shri. K. Raghavacharyulu. Pursuant to the search, proceedings under section 153C of the Act wee initiated in the case of the assessee for the Assessment Year 2005-06to 2010-11 after recording satisfaction required under section 153C of the Act. Assessments were completed under section 153C of the Act for the Assessment Year 2005-06 to 2010-11. The Assessment Year 2011-12 being the year of search, assessment proceedings were completed under section 144 read with Section 153D of the Act. Further, it is contended that the assessment orders for Assessment Year 200506 to 2011-12 was subject matter of appeal before the Commissioner of Income Tax - Appeals. The assessee being aggrieved against the order of Appellate Commissioner preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and assess or reassess the income of the other person in accordance with the provisions of section 153A of the Act subject to conditions contemplated therein. First proviso to section 153C of the Act refers to second proviso of section 153A(1) of the Act for determination of abatement of assessments in the case of proceedings being initiated under section 153C of the Act. The date of search for the purpose of abatement referred to in section 153A of the Act is provided to be the date of receiving the books of account or documents or asset seized or requisitioned by the Assessing Officer having jurisdiction over such other person. The effect of the first proviso is that the assessment pending in respect of the six assessment years referred to in section 153A(1)(b) of the Act would get abated on the date of receipt of books of accounts or documents or asset seized by the Assessing Officer having jurisdiction over such other person. Therefore, on a combined reading of section 153A(1)(b), first and second proviso to section 153A of the Act, Section 153C and the first proviso to Section 153C of the Act would mandate that period of six assessment years for the purposes of section 153A an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esent case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, 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 over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date." 24. He further contends that the reliance of the assessee on the judgment of the Delhi High Court in the case of RRJ securities Ltd is incorrect and the same has not dealt with the proposition canvassed above. The Delhi High Court has not considered the limited purpose of second proviso to section 153A and first proviso to section 153C of the Act, which mandates the point of abatement with respect to period of six assessment years referred to in section 153A(21)(b) of the Act. Further the Delhi High Court has not considered the implication of reference made to section 153A of the Act in section 153C of the Act enabling issue of notice and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contentions, it is submitted that the issue of the period of six assessment years for the purposes of section 153C of the Act being the fresh ground raised by the assessee in the course of hearing of the Miscellaneous Petition, the same was outside the purview of Section 254(2) of the Act which could not have been entertained. Even if such a fresh ground is to be examined by the Tribunal, the order dated 17.10.2016 requires to be recalled and the fresh ground has to be examined in the appeal on restoration. Consideration of the fresh ground in he application under section 254(2) of the Act that to especially in the application filed by the revenue would be beyond the jurisdiction of the Tribunal. 25. Learned counsel would further contend that the reasons assigned by the Tribunal in the common order dated 17.10.2016 for the Assessment year 2005-06 and 2006-07 would be incorrect and contrary to the stand taken by the assessee. The satisfaction recorded in terms of Section 153C of the Act as has been reproduced at para-6 of the order of the ITAT dated 17.10.2016 would clearly indicate that the satisfaction was recorded for the Assessment year 2005-06 and 2010-11. While examining th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32 or requisition of books of account, documents or assets is made under Section 132A after 31.5.2003, the Assessing Officer is obliged to issue notices calling upon the searched person to furnish returns for the six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition was made. The other difference is that there is no broken period from the first day of April of the financial year in which the search took place or the requisition was made and ending with the date of search/requisition. Under Section 153A and the new scheme provided for, the AO is required to exercise the normal assessment powers in respect of the previous year in which the search took place. 19. Under the provisions of Section 153A, as we have already noticed, the Assessing Officer is bound to issue notice to the assessee to furnish returns for each assessment year falling within the six assessment years immediately preceding the assessment year relevant to the previous year in which the search or requisition was made. Another significant feature of this Section is that the Assessing Officer is empowered to assess or reassess th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e taking note of the undisclosed income, if any, unearthed during the search. After such reopening of the assessment, the Assessing Officer is empowered to assess or reassess the "total income" of the aforesaid years. The condition precedent for application of Section 153A is there should be a search under Section 132. Initiation of proceedings under Section 153A is not dependent on any undisclosed income being unearthed during such search. The proviso to the aforesaid section makes it clear the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years. If any assessment proceedings are pending within the period of six assessment years referred to in the aforesaid subsection on the date of initiation of the search under section 132, the said proceeding shall abate. If such proceedings are already concluded by the Assessing Officer by initiation of proceedings under Section 153A, the legal effect is the assessment proceedings and reassess the total, income, taking note of the undisclosed income, if any, unearthed during the search. He has been entrusted with the duty of bringing to tax the total income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 valuable assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of Section 153A. Sub-section (2) of Section 153C states that where books of account or documents or valuable assets seized or requisitioned as referred to in sub- section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under Section 132 or requisition is made under Section 132A and in respect of such assessment year - (a) no return of income has been furnished by such other person and no notice under sub-section (1) of Section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid discussion, we do not think that such can be the correct position of law. 56. Further, in the judgments referred to by the learned counsel for the Revenue, where incriminating material leading to undisclosed income of another assessee was detected in a search operation, in those cases, reopening of the concluded assessment have taken place. There has been no single decision cited by the learned counsel for the Revenue where the assumption of jurisdiction of the Assessing Officer is in the absence of any incriminating material or undisclosed income having been detected during the course of search leading to reopening of a concluded assessment. In the instant case, though documents belonging to the assessee were seized at the time of search operation, there was no incriminating material found leading to undisclosed income. Therefore, assessment of income of the assessee was unwarranted. Consequently, no satisfaction was recorded in the case of the assessee. We answer the substantial question of law No. 2 by holding that the Tribunal was not correct in holding that the assessment under section 153C was valid despite there being no satisfaction recorded to the effect that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of search then there is no question of any of them abating for the simple reason that what can abate is only what remains pending. 17. The judgment of this court in Saraya Industries Ltd. (supra) was relied upon by Mr. Bajpai, in support of his contention that the seizure of the document must be of such nature that even closed assessments for six years could be reopened and this requirement postulates that the provisions of Section 153C can be set in motion only if there is a finding that the seized document or books of account or valuable article represents the undisclosed income of the other person. The said decision does not assist the petitioner. The section merely enables the revenue authorities to investigate into the contents of the document seized, which belongs to a person other than the person searched so that it can be ascertained whether the transaction or the income embedded in the document has been accounted for in the case of the appropriate person. It is aimed at ensuring that income does not escape assessment in the hands of any other person merely because he has not been searched under Section 132 of the Act. It is only a first step to the enquiry, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilitates an enquiry regarding the existence or otherwise of undisclosed income in the hands of the person other than the searched person. The starting point of the enquiry is the seizure of the valuable article or books of account or document, which according to the satisfaction reached by the Assessing Officer, belongs to a person other than the searched person. It is necessary to notice the difference between the two provisions in order to deal with the contention put forward by the ld. counsel for the petitioner that the seizure itself is invalid or illegal on the ground that there could not have been any satisfaction before issuing the warrant of authorization under Section 132 of the Act that the petitioner had earned undisclosed income because the income reflected in the seized documents namely, the Collaboration Agreement dated 24.8.2006 and the Assignment Agreement dated 21. 7.2006, had already been taken note of in the account books of the petitioner. This is a debatable issue as is apparent from the submission of the Revenue. They have submitted to the contrary. It cannot be said that the seizure of the documents was unwarranted or contrary to law. As noticed above, Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Section 153C is somewhat cumbersome and that the person other than the searched person is put to some inconvenience cannot be an argument to hold that the entire proceedings are bad in law. 20. Section 158B of the Act is the dictionary clause. It provides for the definition of "block period" and "undisclosed income". For the purpose of this case, a reference to the definition of the "undisclosed income" as provided for in Section 158B(b) is necessary and, therefore, it is noticed. The same reads as under: "Undisclosed income" includes any money, bullion, jewellery or other valuable article or thing or any income based on any entry in the books of account or other documents or transactions, where such money, bullion, jewellery, valuable article, thing, entry in the books of account or other document or transaction represents wholly or partly income or property which has not been or would not have been disclosed for the purposes of this Act [or any expense, deduction or allowance claimed under this Act which is found to be false]". 22. Section 158BC speaks of procedure for assessment of a person searched under Section 132 of the Act or books of accounts, other documents or as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after recording such satisfaction, may transmit the records/documents/chits/papers etc to the assessing officer having jurisdiction over such other person. After receipt of the aforesaid satisfaction and upon examination of the said other documents relating to such other person, the jurisdictional assessing officer may proceed to issue a notice for the purpose of completion of the assessments under Section 158BD of the Act, the other provisions of XIV-B shall apply. 39. The opening words of Section 158BD of the Act are that the assessing officer must be satisfied that "undisclosed income" belongs to any other person other than the person with respect to whom a search was made under Section 132 of the Act or a requisition of books were made under Section 132A of the Act and thereafter, transmit the records for assessment of such other person. Therefore, the short question that falls for our consideration and decision is at what stage of the proceedings should the satisfaction note be prepared by the assessing officer: whether at the time of initiating proceedings under Section 158BC for the completion of the assessments of the searched person under Section 132 and 132A of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized assets/documents on search of the Assessee; the seized assets/documents belonging to a person other than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the 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". V) CIT vs. Sun Engineering Works (P.) Ltd held as under: "37. The principle laid down by this Court in Jaganmohan Rao's case, therefore, is only to the extent that once an assessment is validly reopened by issuance of notice under Section 22(2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and treat it to be the complete 'law' declared by this Court. The judgment must be read as a whole and the observations from the judgment have to be considered in the light of the questions which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and while applying the decision to a later case, the courts must carefully try to ascertain the true principle laid down by the decision of this Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasonings. In Madhav Rao Jiwaji Rao Scindia Bahadur and Ors. v. Union of India this Court cautioned: It is not proper to regard a word, a clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment". 27 .These are all the contentions and various grounds taken by learned standing counsel Sri K.V. Arvind for appellant / Revenue by referring to the citations and submits that the aforesaid reliances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Bangalore. The CIT (A) vide common order dated 25.08.2014 confirmed the additions for A.Y. 2005-06 to 2011-12. The respondent-assessee challenged the aforesaid order passed by the CIT(A) before the ITAT, Bangalore Bench in ITA Nos. 1444-1450/BANG/2014. The Hon'ble ITAT vide order dated 17.03.2016 allowed the appeal and set aside the assessment orders for A.Y.2005-06 TO 2011-12. The Hon'ble Tribunal held that there is no satisfaction recorded by the Assessing Officer of the searched person which is mandatorily required for issuing notice u/s 153C of the Act. Thereafter, the Department filed MP No. 149/BANG/2016 in ITA No. 1450/BANG/2014 pertaining to A.Y. 2011-12 seeking rectification of order dated 17.10.2016 u/s 254(2) of the Act passed in ITA No. 1450/BANG/2014 on the ground that the assessment proceedings for A.Y. 2011-12 were completed u/s 144 read with Section 153D of the Act. It was the case of the department that the assessment for A.Y. 2011-12, being the year of search could not have been quashed on the basis that satisfaction as required u/s 153C of the Act was not recorded by the AO of the searched person as A.Y. 2011-12 was the year of search. The ITAT vide impugned orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce to the date of recording of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C(1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon'ble Delhi High Court in CIT vs. RRJ Securities Ltd., was dismissed by the Hon'ble Supreme Court vide order dated 24.04.2018. Thus, it can be concluded that there is no judgment of any other High Court which has taken a contrary view to the ratio laid down in the case of CIT vs RRJ Securities. Furthermore, the Civil Appeal preferred by the department against the aforesaid judgment has been dismissed. Therefore, it is submitted that there is no error in law in the impugned order passed by the ITAT seeking intervention as there is no illegalities or error committed by the ITAT. 35. Further, it is contended that it is settled law that while construing penal statutes and taxation statutes, the Court has to apply strict rules of interpretation Article 226 of the Constitution prohibits the State from extracting tax from the citizen without authority of law. The natural corollary to the said provision is that State cannot burden the citizen without the authority of law and thus, taxation statutes has to be interpreted strictly. The Hon'ble Supreme Court in the case of Commissioner of Customs v. Dilip Kumar & Co., (2018) 9 SCC 1 held that if there are two view possible in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. It was further held that even in a case where AO of both the persons is the same and there is no requirement of physical handing over of documents, the recording of satisfaction is still a must as the same is the foundation upon which subsequent proceedings against the other person is initiated. In the aforesaid case of CIT vs. Gopi Apartment, the Allahabad High Court held as under:- "(1) The first stage comprises of a search and seizure operation under Section 132 or proceeding under Section 132A against a person, who may be referred as 'the searched person'. Based on such search and seizure, assessment proceedings are initiated against the 'searched person' under Section 153A. At the time of initiation of such proceedings against the 'searched person' or during the assessment proceedings against him or even after the completion of the assessment proceedings against him, the Assessing Officer of such a 'searched person', may, if he is satisfied, that any money, document etc. belongs to a person other than the searched person, then such money, documents etc. are to be handed over to the Assessing Officer having jurisdiction over 'suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the grounds urged by the appellant/revenue does not have any substance calling interference of this Court and the appeal being devoid of merits is liable to be dismissed. 40. In support of his contentions, learned counsel for the respondent has relied on the following decisions: 1) 2014 SCC OnLine All 16050: (2014) 365 ITR 411: (2014) 270 CTR 447 Commissioner Of Income Tax vs M/S Gopi Apartment "25. Thus, there are two stages: (1) The first stage comprises of a search and seizure operation under Section 132 or proceeding under Section 132A against a person, who may be referred as 'the searched person'. Based on such search and seizure, assessment proceedings are initiated against the 'searched person' under Section 153A. At the time of initiation of such proceedings against the 'searched person' or during the assessment proceedings against him or even after the completion of the assessment proceedings against him, the Assessing Officer of such a 'searched person', may, if he is satisfied, that any money, document etc. belongs to a person other than the searched person, then such money, documents etc. are to be handed over to the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterprises, (2013) 358 ITR 465 (All)". 2) (2014) 6 SCC 444 - Commissioner of Income Tax - III vs. Calcutta Knitwears, Ludhiana "37. The Tribunal and the High Court are of the opinion that it could only be prepared by the assessing officer during the course of the assessment proceedings under Section 158BC of the Act and not after the completion of the said proceedings. The Courts below have relied upon the limitation period provided in Section 158BE(2)(b) of the Act in respect of the assessment proceedings initiated under Section 158BD, i.e., two years from the end of the month in which the notice under Chapter XIV-B was served on such other person in respect of search initiated or books of account or other documents or any assets are requisitioned on or after 01.01.1997. We would examine whether the Tribunal or the High Court are justified in coming to the aforesaid conclusion. 38. We would certainly say that before initiating proceedings under Section 158BD of the Act, the assessing officer who has initiated proceedings for completion of the assessments under Section 158BC of the Act should be satisfied that there is an undisclosed income which has been traced out when a pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue/state, as exemptions from taxation have a tendency to increase the burden on the unexempted class of taxpayers - general principle that in case of ambiguity a taxing statute should be construed in favour of the assessee - inapplicability of, to an exempting provision - held, every taxing statute including, charging, computation and exemption clauses, at the threshold state should be interpreted strictly - further, though in case of assessee, but for an exemption notification or exemption clause the benefit of ambiguity must be strictly interpreted in favour of the revenue/state. 41. In the background of the contentions made by the learned Standing Counsel Shri Arvind K.V. for the appellants / Revenue and so also the learned counsel Shri Mayank Jain for the respondent / Assessee, it is to be seen that as on 25.10.2010, a search under Section 132 of the IT Act, 1961 was carried in the case of Sri. Raghavacharyulu, Smt. Renuka, and others. During the course of search proceedings, various documents belonging to the assessee were assessed and certain incriminating materials were found and seized during the course of search against the respondent / assessee. Consequently, the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce for assessing or reassessing the total income 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 as referred to in sub-section (1) of section 153A except in cases where any assessment or reassessment has abated. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y in a case where a notice under sub- section (1) of section 142 has been issued prior to the making of an assessment under this section. (2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any assessment for the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year and references in this section to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year." Section 153D of the Income Tax Act reads thus: "153D. Prior approval necessary for assessment in cases of search or requisition.- No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner: Provided that nothing contained in this section shall apply where the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not recorded by the AO of the searched person as A.Y. 2011-12 was the year of search. The ITAT vide impugned order dated 06.03.2018 dismissed the aforesaid MP No.149/BANG/2016 by relying upon the judgment of the Delhi High Court in the case of CIT vs. RRJ Securities Ltd., (2016) 380 ITR 612. 46. The Income Tax Department has challenged the aforesaid order passed by the Income Tax Appellate Tribunal under Section 260-A of the IT Act. But it is relevant to note that, upon the objection raised by the counsel for the respondent that against an order passed in a miscellaneous petition, appeal under Section 260-A of the IT Act was not maintainable without there being challenge to the main order passed in appeal by the Income Tax Appellate Tribunal. 47. The Department proceeded to amend the appeal and also included the challenge to the order dated 17.10.2016 passed in ITA NO. 1450/BANG/2016. In the aforesaid appeal, the Department proposed the substantial questions of law for its consideration. The Tribunal was right in law in holding that the assessment year relevant to the financial year in which satisfaction note is recorded under Section 153-C of the Act, will be taken as the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to certain incriminating materials found during the course of search against the respondent / assessee and consequence upon that, notice was issued under Section 153-C of the IT Act. Whereas the learned counsel for the respondent in this matter facilitated the judgment of CIT vs. RRJ Securities Ltd. (supra). 53. In the aforesaid judgment, it was held that the period of 6 years stipulated in Section 153-C of the IT Act have to be construed with reference to the date of handing over the documents to the Assessing Officer of the assessee and not the year of search. The said reliance is squarely applicable to the present case on hand relating to initiation of proceedings in respect of certain incriminating materials which were found during the course of search of the respondent / Assessee. Whereas the Revenue / appellant submits that the relevant six Assessment years would be the assessment years even prior to the assessment year relevant to the previous year in which search was conducted. If this interpretation is taken into consideration and if the argument canvassed by the revenue is accepted, it would mean that in case of a person searched, assessments in relation to six previou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed by the Income Tax Appellate Tribunal for the Assessment years 2005-06 to 2010-11 that is I.T.A.No. 1444-1449/BANG/2016 were never challenged and the finding that the satisfaction note was absent and there was lack of jurisdiction under Section 153-C of the Act, in the case of the respondent / assessee, had attained finality. Therefore, this appeal is filed challenging the impugned order by urging various grounds and framing substantial questions of law. However, it cannot arise for response merely because substantial questions of law have been proposed by the appellant / Revenue. 56. It is further contended that it is settled law that while construing penal statutes and taxation statutes, the Court has to apply strict rules of interpretation and Article 226 of the Constitution prohibits the State from extracting tax from the citizen without authority of law. The natural corollary to the said provision is that State cannot burden the citizen without the authority of law and thus, taxation statutes has to be interpreted strictly. The Hon'ble Supreme Court in the case of Commr. of Customs v. Dilip Kumar & Co., (2018) 9 SCC 1 held that if there are two view possible in the matter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of proceedings against such other person is dependent upon the satisfaction being recorded and the same must be recorded before issuance of notice to such other person u/s 153C of the Act. It was further held that even in a case where AO of both the persons is the same and there is no requirement of physical handing over of documents, the recording of satisfaction is still a must as the same is the foundation upon which subsequent proceedings against the other person is initiated. In the aforesaid case of CIT vs. Gopi Apartment, the Hon'ble Allahabad High Court held as under:- "(1) The first stage comprises of a search and seizure operation under Section 132 or proceeding under Section 132A against a person, who may be referred as 'the searched person'. Based on such search and seizure, assessment proceedings are initiated against the 'searched person' under Section 153A. At the time of initiation of such proceedings against the 'searched person' or during the assessment proceedings against him or even after the completion of the assessment proceedings against him, the Assessing Officer of such a 'searched person', may, if he is satisfied, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is held in the Headnotes A, B and C thus: "A. Income Tax Act, 1961 - Ss. 158-BD and 158BE(2)(b) - Initiation of proceedings against any other person other than searched person - stages at which satisfaction note may be prepared by AO as to undisclosed income to transmit documents to Jurisdictional AO to proceed under S.158-BD against any such person other than the searched person - Limitation period, if any B. Income Tax Act, 1961 - Ss. 158-BD, 158-BC, 132, 132-A and Ch.XIV-B - Initiation of proceedings under S. 158-BD against person other than searched person as to existence of undisclosed income - Satisfaction of assessing officer (AO as to existence of undisclosed income belonging to person other than searched person - Requirement of documentary evidence for satisfaction-Held, cogent and demonstrative material is sine qua non to AO's satisfaction in concluding that seized documents belong to person other then searched person for initiation of action under Section 158-BD. C. Interpretation of Statutes - Particular Statutes or provisions - Taxation laws - Strict interpretation - Held, where words of statute are absolutely clear and unambiguous, recourse cannot be had to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer is satisfied that, (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any Books of Account or documents, seized or requisitioned, 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. 65. Learned Standing Counsel for the appellant / Revenue had emphasized the 'other than' provision. 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 132-A in the second proviso to sub-section (1) of Section 153-A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisioned by the Assessing Officer having jurisdiction over such other person. 66. The aforesaid Standing counsel has contended by emphatically referring to the aforesaid provision of the IT Act, 1961 relating to response to the substantial questions of law which have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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