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TMI Blog2024 (8) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment order passed u/s 153C of the Act for the A.Y. 2008-09 is quashed due of the lack of jurisdiction of the AO to initiate the proceeding u/s 153C for this year. Since, the assessment order is quashed due to AO s lack of jurisdiction to initiate proceeding u/s 153C of the Act for the A.Y.2008-09, we do not deem it necessary to adjudicate the grounds taken by the Revenue as well as by the assessee. - SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER For the Appellant : Dr. Darsi Suman Ratnam, CIT. DR For the Respondent : Shri Jignesh Parikh, AR ORDER PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed by the Revenue against the order of the Commissioner of Income Tax (Appeals)-11, Ahmedabad, (in short the CIT(A) ) dated 18.06.2019 for the Assessment Year 2008-09. 2. The brief facts of the case are that a search under Section 132 of the Act was carried out in Suraj Group of cases on 18.12.2013. Certain incriminating documents belonging to the assessee was found during the course of search proceeding. Therefore, the AO initiated proceeding under Section 153C of the Act against the assessee for the A.Y. 2008-09 by issuing notice und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld. AO has erred in law and on facts while making the addition/disallowance, in absence of any incriminating material indicating any unaccounted investment by the appellant company or relating to the investment made by Ganesh Plantations Ltd. as well as purchase and sale of shares of Suraj Stainless Ltd. In view of the settled legal position by the various courts of law that in 153C assessment proceedings, additions cannot be made unless they are based on any incrimination material or inquiries based on such material, the impugned addition/disallowance made by the AO is unjustified, illegal and hence deserves to be deleted. 7. Dr. Darsi Suman Ratnam, Ld. CIT.DR and Shri Jignesh Parikh, Ld. AR for the assessee were heard in respect of the grounds as taken by the Revenue as well as the grounds raised by the assessee. The matter was heard on 6th June, 2024 and reserved for orders. Subsequently, it was noticed by us that proceeding under Section 153C of the Act was initiated in this case on 11.01.2016 for the A.Y. 2008-09. The Hon ble Supreme Court had held in the case of CIT vs. Jasjit Singh, [2023] 155 taxmann.com 155 (SC) that the block period for the proceeding under Section 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of documents pertaining to the assessee from the AO of searched person to the AO of other person. In the present case, however, the AO of the searched person and the AO of the other person was the same and there was no requirements of transfer of seized documents belonging / pertaining to the assessee. The issue of notice under Section 153C of the Act in the case of the present assessee was only a technical requirement without transfer of the seized documents. Therefore, the facts of the present case were different from the facts of the Jasjit Singh (supra) Ushaben Jayantilal Patel (supra) and, therefore, the ratio of the said decision cannot be applied to the facts of the present case. According to the Ld. CIT.DR, only the date of search needs to be applied in the present case to calculate the block period for initiating proceeding under Section 153C of the Act. He further submitted that since the hearing of the present case was concluded on 06.06.2024 and only a clarification on specific point was sought by the Ld. Tribunal, the assessee was not entitled to raise any specific ground on the basis of fresh facts. The Ld. CIT.DR vehemently contended that the judgment in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. In the present case the AO of the searched person and the AO of the other person was same. Therefore, there was no requirement of actual handing over of the seized documents belonging to the assessee to any other AO. Nevertheless, in order to assume jurisdiction on the case of the other person it is necessary for the common AO to record his satisfaction that the seized document pertains/belongs to the other person. Until and unless he records such satisfaction, he can t assume the jurisdiction to initiate proceedings u/s 153C of the Act in the case of other person. The condition of recording satisfaction note by the AO of the searched person was, therefore, required to be mandatorily complied in this case as well. 13. In the course of hearing, vide order sheet note dated 11.09.2023, the Ld. CIT.DR was required to produce the satisfaction note of the AO of the searched person while handing over the documents found during the search and relating to the assessee, as prescribed by law under Section 153C of the Act. The satisfaction note as recorded by the AO of the searched person was not produced by the Revenue and a reply of the AO [DCIT, Central Circle-1(3)] dated 13.10.2023 was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een very much clear about Satisfaction drawn by the Investigation Officer, facts narrated in the appraisal report on seized material and specific recommendations for initiation of proceedings u/s 153C of the act. Therefore, the order of the AO may kindly be held valid and in accordance with law. 2.2 Still efforts are on to trace that specific folder / page deriving satisfaction under section 153C of the act as the AO of the searched assessee and the AO over M/s. Suraj Limited was one and the same and there is a possibility that it might be tagged together at one specific folder kept separately for action u/s 153C of the act or may be tagged with other cases of the same group. 14. Even if we accept the contention of the Revenue that there was no requirement of transfer of seized documents from one AO to another in this case, the proceeding under Section 153C of the Act could have been initiated only after recording of satisfaction by the AO of the searched person. It has been held by the Hon ble Supreme Court in the case of Super Malls (P.) Ltd. vs. Pr. CIT [2020] 273 Taxman 556 (SC) that before issuing notice under Section 153C of the Act the AO of the searched person must be satis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction by the AO of the searched person is a mandatory requirement for initiation of proceeding under Section 153C of the Act. It is only by recording the satisfaction that the common AO assumes the jurisdiction to issue notice u/s 153C of the Act in respect of the other person. Further, it is only on the date of recording of satisfaction that the AO of the other person will assume the jurisdiction to initiate proceeding under Section 153C of the Act in respect of the other person. Therefore, the submission of the Revenue that only the date of search needs to be applied to calculate the time limit in the present case, is neither correct nor in accordance with the provision of law as well as the decision of Hon ble Supreme Court in the case of Super Malls (P.) Ltd.(supra). It doesn t matter whether the assessee is related or unrelated to the searched group. The date of recording of satisfaction by the AO of the searched person will be the relevant date to initiate the proceeding under Section 153C of the Act and the time limit of six assessment years has to be computed with reference to the date of recording of satisfaction by the AO of the searched person. The seized document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itiated in respect of such other person. 17. The Hon ble Delhi Court has categorically held in the case of PCIT vs. Ojjus Medicare (P.) Ltd., [2024] 161 taxmann.com 160 (Delhi) that in case of a search assessment undertaken under Section 153C of the Act, the previous year of search would stand substituted by the date or the year in which the books of accounts / documents and assets seized are handed over to the jurisdictional AO of the other person as opposed to the year of search which constitutes the basis for an assessment under Section 153A of the Act. Thus, the block period for the proceedings under Section 153C of the Act has to be computed from the date of receipt of books of accounts or documents by the AO of the non-searched person. This principle has been upheld by the Hon ble Supreme Court in the case of CIT vs. Jasjit Singh (supra), wherein it was held that in case of other person the period for which they were required to file returns u/s 153C of the Act, commenced only from date when materials were forwarded to their jurisdictional Assessing Officers. The Apex Court categorically held that the proviso to section 153C(1) catered not merely to question of abatement but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seen that widest jurisdiction has been conferred on the Tribunal which has been given powers to pass such orders, as it thinks fit . Further, Rule 11 of the Income Tax (Appellate Tribunal) Rules, 1963 stipulates as under: 11. The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule: Provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground. (emphasis supplied) 22. This Rule, in no unequivocal terms, gives power to the Tribunal to not to confine its decision only on the grounds as set forth in the memorandum of appeal or the grounds as allowed in the course of hearing. This Rule doesn t circumscribe or control the power of the Tribunal to pass the orders in the manner as it thinks fit. A constructive reading of section 254(1) of the Act and Rule-11 of ITAT Rules makes it amply clear that the ITAT is competent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the Department, in the absence of an appeal or cross-objection by the other side projecting the new ground. It is a settled principle of law that procedural law is the handmaid of justice and has to be so interpreted to advance the cause of justice and not to thwart it. It is a solemn duty of the taxing authorities to correctly assess the tax liability of an assessee by duly following the relevant provision of law and, therefore, an inflexible and mechanical adherence to the law of procedure cannot be countenanced and in the process deny an assessee a benefit to which it is otherwise entitled in law. That could not have been the purpose of framing the Appellate Tribunal Rules. There cannot be any estoppel against law. Therefore such a primacy is not to be granted to the rules of procedure so as to wipe off a substantial right otherwise available to the assessee in law. This view is also reinforced by the language of r. 11 which does not require the Tribunal to be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal provided the party who may be affected thereby had sufficient opportunity of being heard on that ground. Therefore it is per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Thermal Power Co. Ltd. vs. CIT, [1998] 229 ITR 383 (SC) the Hon ble Supreme Court has held that the power of the tribunal in dealing with the appeals is expressed in widest possible terms. The Hon ble Court further held that the view that the Tribunal was confined only to issues arising out of the appeal before the CIT(A) was too narrow a view of the powers of the Tribunal. It was categorically held by the Hon ble Apex court that where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings, such question has to be examined by the Tribunal when it is necessary to consider that question, in order to correctly assess the tax liability of the assessee. In the present case also, the question of law regarding jurisdiction of the AO to initiate assessment proceeding u/s 153C of the Act for the A.Y.2008-09 is arising from the facts which are already available on record of the assessment proceedings. Therefore, the question of jurisdiction, which is necessary to correctly assess the tax liability of the assessee, is required to be considered and decided by us. 28. In view of the above provisions of law and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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