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TMI Blog2024 (9) TMI 1383X X X X Extracts X X X X X X X X Extracts X X X X ..... d 153C have been inserted by the Finance Act, 2003 w.e.f., 1.6.2003, which specifically contemplates assessments in cases of search or requisition. Section 153A of the IT Act contains various stipulations with regard to the person searched and Section 153C of the IT Act contains various stipulations with regard to such other person, other than the person searched. A coordinate Bench of this Court in the case of Dinakar Suvarna [ 2022 (7) TMI 800 - KARNATAKA HIGH COURT ] while considering an appeal of the assessee, in a fact situation wherein an assessment was re-opened u/s 147 of the IT Act based on a search conducted and the procedure u/s 153 of the IT Act was not followed was under consideration. In view of the settled position of law as noticed above, once material pursuant to a search is relied upon, the AO is required to follow the procedure as contemplated under Section 153A, 153B and 153C and it is impermissible for the AO to continue the regular assessment. Decided in favour of the assessee and against the Revenue. - HON'BLE MR. JUSTICE S.G.PANDIT AND HON BLE MR. JUSTICE C.M. POONACHA For the Appellants (By Sri Y V Raviraj, Advocate A/W Sri Sushal Tiwari N, Advocate). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l as the Revenue preferred appeals before the Tribunal. The Tribunal, by its order dated 28.6.2019 dismissed the appeal of the Revenue and partly allowed the appeal of the assessee. Being aggrieved, the present appeal is filed by the Revenue. 6. This Court, vide order dated 30.9.2020 admitted the above appeal and framed the following substantial question of law: 1. Whether on the facts and circumstances of the case, it is submitted that the Tribunal erred in holding that assessee-company is entitled for deduction under section 10B of the Act without appreciating that the assessee-company has not exported Article to satisfy the conditions set out in section 10B of the Act? 2. Whether on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessing authority cannot take cognizance of the seized material in the proceedings under section 143 (3) of the Act without invoking provisions of Section 153C of the Act by ignoring that there is no bar section 143 (3) nor under section 153C or under any other provisions of the Act to take cognizance of seized material in regular assessment? 7. It is the contention of learned counsel Sri Y.H. Raviraj a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h parties. The facts not in dispute are that the substantive and protective additions were made in the case on hand on the basis of material found and seized from the premises of Shri. Manoj Kumar Jain. It is also amply clear that the AO did not invoke the provisions of Section 153C of the Act on receipt of the material; but rather chose to take cognizance of these materials (i.e., seized in the case of Shri. Manoj Kumar Jain) in the course of pending assessment proceedings under section 143 (3) of the Act for Assessment Year 2008-09 that were before him. It is therefore clearly established that the AO has used seized material/documents found in the course of search conducted in the case of a third party (i.e., search of Shri. Manoj Kumar Jain) for making the additions in the hands of the assessee, although, on protective and substantive basis; which was later on modified as substantive by the CIT(A). 7.6.2 The provisions of Section 153C of the Act enjoins upon the AO of the person searched; that on being satisfied that books of account seized or requisitioned belongs to or pertain to some other persons, to handover the books of account to the AO having jurisdiction over such other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri. Manoj Kumar Jain . The AO noted that the assessment proceedings in the case of Shri. Manoj Kumar Jain were 'being concluded at Central Circle-1, Belgaum'. Thereafter, he has gone on to set-out the issues in the case of Shri. Manoj Kumar Jain, relevant to the assessee in the case on hand. But no satisfaction, it appears, has been recorded that these materials have a bearing on the determination of income. Thus, the AO has not followed the procedure laid down in section 153C of the Act for taking cognizance of the material found / seized in the case of Shri. Manoj Kumar Jain and making an assessment with reference to those materials in the case on hand. 7.6.7 Taking into account the aforesaid factual and legal matrix, we are of the considered view that the AO could not have taken cognizance of the seized documents and other material found and seized in the course of search conducted in the premises / case of Shri. Manoj Kumar Jain, while framing the order of assessment under section 143 (3) of the Act in the case on hand. As a matter of fact, the ongoing assessment proceedings under section 143 (3) of the Act would abate on receipt of these seized materials as per the se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diary Smt. Soumya Shetty had passed away prior to the date of search. It was argued on behalf of the Revenue that Shri. Ashok Kumar Chowta had offered tax on lump-sum income. 11. Further, the Assessing Officer has not recorded his satisfaction with regard to escapement of income. On the other hand, he has based Revenue's case entirely on the statement of assessee. (emphasis supplied) 14. A Division Bench of the Rajasthan High Court in the case of Shyam Sunder Khandelwal v. ACIT (2024) 161 taxmann.com 255 (Rajasthan) has held as follows: 24. In the case where search or requisition is made, the AO under Section 153A mandatorily is required to issue notices to the assessee for filing of income tax return for the relevant preceding years. The AO assumes jurisdiction to assess/reassess 'total income' by passing separate order for each assessment. 25. In cases of the person other than on whom search was conducted but material belonging or relating such person was seized or requisition, the AO has to proceed under Section 153C. The two pre-requisites are that the AO dealing with the assessee on whom search was conducted or requisition made, being satisfied that seized materia ..... X X X X Extracts X X X X X X X X Extracts X X X X
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