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TMI Blog2023 (10) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... hat before issuance of notice u/s 153C (for the extended period) the AO sets out his objective satisfaction from the seized material, the details of the specified/undisclosed assets in possession qua the assessee for AY 2011-12 valued at Rs. 50 lacs or more. If this essential requirement of law is not satisfied, the AO does not get the authority of law to invoke the jurisdiction u/s 153A of the Act for 7th to 10th AY. As assessee had disclosed the sale transactions and liquidation of shares in his regular books of accounts and the liquidation of shares were received in bank. Thus the aforementioned assets cannot be termed as undisclosed assets. It has been appositely concluded in the concurrent decisions of the CITA and ITAT that it cannot be held that the allegedly undisclosed assets have escaped assessment. Addition was on account of unexplained cash credit represented by sale proceeds u/s 68 - The additions on account of unexplained cash credit , could not have been made by the AO, unless he initially made an addition of undisclosed asset valued at Rs. 50 lacs or more. In this case, as there was no addition made by the AO on account of undisclosed assets, ex consequenti, an infe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax, Guwahati, respectively. The respondent is Fortune Vanijya Private Limited. 4. Brief facts of the present case are that during search under Section 132(1) of the IT Act, in the case of M/s. Sagar Steels, Guwahati on 22.12.2017, a bunch of loose sheets with identification mark SST-01 containing pages 1 to 90 were seized. Examination of pages 61 to 69 revealed that these were Journal of Bank Ledgers of M/s Fortune Vanijya Pvt. Ltd. On the basis of these documents notice u/s 153C was issued to the assessee. In compliance, the assessee furnished return of income on 25.12.2019 declaring a total income of Rs. 360/-. 5. The assessment was conducted for the year 2018/2019. The Assessing Officer ('AO', for short), initially issued notices dated 27.09.2019, under Section 153 A of the Act, for the Assessment Year 2012-13 up to the Assessment Year 2017-18, assuming that the respondent/assessee was searched. The assessee in fact was not the searched person. Notices were also issued under Section 142(1) of the Act dated 11.11.2019, calling for several details/information. It has been alleged by the AO that Pages 61 to 69 of SST-01 pertaining to the respondent (also referred to as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... im these facts alone did not make the arrangement genuine. The AO, thereafter referred to the purported statement given by Shri Hemant Kumar Agarwal, one of the Directors of Sagar Group, under Section 132(4) of the Act, wherein he stated that he had acquired the assessee company to route his undisclosed monies. The AO, therefore, was not satisfied with the explanations provided by the assessee regarding the proceeds of Rs. 9,63,00,000/- received upon sale of investments and thus added the same by way of unexplained cash credit under Section 68 of the Act. 8. The assessee challenged the usurpation of jurisdiction under Section 153C of the Act by the AO, without first satisfying the essential condition precedent in the fourth proviso to Section 153A, read with Explanation 2 of the Act. It was pointed out that the notice for reassessment of AY 2011-12, which was beyond the period of six assessment years preceding the searched AY, could have been issued only where the AO had in his possession any incriminating material which revealed that income represented in the form of asset valued at Rs. 50 lacs or more had escaped assessment. The term 'asset' is defined in Explanation (2) to incl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th proviso to Section 153A of the Act and the consequent order framed under Section 153C/143(3) was bad for want of jurisdiction, rendering the assessment order framed by the AO non est and void. 10. Being aggrieved by the order of the AO, the assessee preferred an appeal before the learned CIT (A). The learned CIT(A) called for the assessment folder of the assessee and granted relief to the assessee on the following grounds, viz. i) The satisfaction note was recorded on factually perverse and incorrect facts and for that reason, the proceedings initiated under Section 153C of the Act was bad in law and thus, the consequent order passed was void and so, it was quashed. ii) The AO had initially issued notices under Section 153A of the Act and thereafter, switched over to proceedings under Section 153C of the Act without consigning (sic) the earlier proceedings and, therefore, according to him, the assessments which were framed under Section 153C based on the returns filed under Section 153A of the Act were a nullity. iii) The AO had not issued the mandatory notice under Section 143(2) of the Act after the assessee had filed the return of income and, therefore, non-issuance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... first proviso to Section 153 C of the Act, this date, i.e., 05.12.2019, had to be reckoned as the date of search for the purpose of assessment under Section 153 C of the Act. The relevant year in question is, however, AY 2011-12, which is the ninth assessment year preceding the date of search. There was an inadvertent error, wherein it was mentioned that the AY 2011-12 was the seventh assessment year. 15. It is argued by the respondent that the AO has no locus to issue notice under Section 153A/153C of the Act, unless the condition precedent therein is satisfied. The fourth proviso to Section 153 A of the Act bars the AO from issuing notice under Section 153 A/153 C of the Act, for the assessment or reassessment of the 7th upto 10th assessment years, unless he has in his possession evidence/material, which reveals that income represented in the form of 'asset', valued at Rs. 50 lacs or more had escaped assessment. This is the 'jurisdictional fact', which if available/ or in possession of AO will only enable the AO to assume jurisdiction under Section 153 A/ 153 C of the Act for these extended AYs. The AO however acted sans 'jurisdictional fact'. Consideration of submissions 16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the counsel for the Department could not point out to the contrary. It is for this reason the High Court has also given its imprimatur to the aforesaid approach of the Tribunal. That apart, learned senior counsel appearing for the respondent, argued that notice in respect of Assessment Years 2000-01 and 2001-02 was even time barred. 19) We, thus, find that the ITAT rightly permitted this additional ground to be raised and correctly dealt with the same ground on merits as well. Order of the High Court affirming this view of the Tribunal is, therefore, without any blemish. Before us, it was argued by the respondent 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. 18. In this case at hand, the ITAT has observed that the satisfaction note reveals that, the AO had referred to the pages 61 to 69 of seized material bearing identification mark SST-01 for assuming jurisdiction u/s 153C read with the fourth proviso to Section 153A of the Act. The ITAT has also observed that the satisfaction note of the AO does not reveal any 'asset' which had escaped as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concluded in the concurrent decisions of the CITA and ITAT that it cannot be held that the allegedly undisclosed assets have escaped assessment. 20. It has emerged from the foregoing discussions that the addition made by the AO in AY 2011-12 was on account of unexplained 'cash credit' represented by sale proceeds of Rs. 9,63,00,000/- u/s 68 of the Act. The additions on account of unexplained 'cash credit', could not have been made by the AO, unless he initially made an addition of undisclosed 'asset' valued at Rs. 50 lacs or more. In this case, as there was no addition made by the AO on account of undisclosed assets, ex consequenti, an inference deserves to be drawn that there was no 'jurisdictional fact' for the AO to assume jurisdiction u/s 153C for AY 2011-12. The usurpation of jurisdiction u/s 153C of the Act is bad in law, for want of jurisdiction as the AO was precluded from making any other addition in the assessment for AY 2011-12. Therefore, the AO's action of addition u/s 68 of the Act for the relevant AY 2011-12 is untenable in the eyes of law. 21. The learned ITAT has appositely held that as the AO had recorded his satisfaction on 05.12.2019 and by virtue of the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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