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TMI Blog2024 (10) TMI 468X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 invoking section 153C/153A of the Act. Even for a moment, it is presumed that cash found was undisclosed income for AY 2017-18 i.e. the year in which cash was found, no addition can be made in AY 201314 to AY 2016-17. Therefore, additions made without there being any incriminating material found in search, are deleted. Decided in favour of assessee. Validity of assessment proceedings 153C/153A beyond period of limitation - selection of initial assessment year - determination of six assessment years - contention of the assessee is that six preceding assessment years for invoking section 153C have been taken by the AO from AYs 2016-17 to AY 2010-11, corresponding to six assessment years, preceding the assessment year in which search was conducted on searched person - HELD THAT:- Hon ble Supreme Court in the case of CIT vs Jasjit Singh [ 2023 (10) TMI 572 - SUPREME COURT ] has held that six assessment years in case of other person i.e. person other than searched person, are to be reckoned from the assessment year, preceding to assessment year in which seized material was handed over to the AO of other person We hold that in the case of assessee, the assessment year 2017-18 falls wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 43CA of the Act. 6. The Ld. AO has erred in initiating penalty proceedings u/s 274 r.w.s 271AAB(IA) of the Act vide letter dated 30.12.2018. The Appellant prays that the penalty proceedings u/s 274 r.w.s 271AAB(1A) of the Act be dropped. 7. The Ld. CIT (A) has erred upholding the action of AO in levying interest u/s 234B of the Act of Rs. 47,09,940/- and u/s 234C of Rs. 2,57,430/- of the Act. 3.1 The assessee also filed additional grounds for AY 2017-18, which are reproduced as under: 9.0 The assessment order passed u/s. 143(3) of the Income Tax Act, 1961 by the assessing officer is bad in law. 9.1 In doing so, he has not considered the fact that the cases were centralized on 12.07.2018 and his satisfaction note was recorded on 16.07.2018 and as such the initial year for assessment u/s. 143(3) would be assessment year 2019-2020 and not the assessment year 2017-2018. 9.2 In doing so, he has disregarded the decision of the honourable Apex Court in Commissioner of Income-tax v. Jasjit Singh [2023 155 Taxmann.com 155 (SC)] in as much as the initial year for invocation of proceedings u/s. 153C would be the year in which the case material is handed over to the assessee whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed being purely legal in nature and not requiring any investigation of the fresh facts, therefore, after hearing both the parties, the additional grounds are admitted for adjudication in view of the settled law in the case of NTPC Ltd. 229 ITR 283 (SC). 4. Briefly stated, facts of the case for disposal of the legal issues raised are that the assessee company was engaged in the business of real estate development during the period under consideration i.e AY 2013-14 to AY 2017-18. The Assessing Officer noted that Shri Ishwardev Shukla (Director of the assessee company), was carrying cash of Rs.12.26 lakhs while travelling from Delhi to Mumbai, by Spice Jet Flight SG-161 on 16.12.2016. The Air Intelligence Unit (AIU) of the Investigation Wing Income-tax Department, Mumbai intercepted him on 16.12.2916, at Mumbai Airport on his arrival. 4.1 Thereafter, a survey proceeding u/s 133A of the Act was carried out on 17.12.2016 at business premises of assessee. In the survey proceedings various documents including diaries and data on computer relating to real estate business transactions were found and impounded. During the survey proceedings, statement of Shri Ishwardev Shukla was recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years under assessment before him. The project wise extrapolated amount computed by the Assessing Officer is available on page 16 of the assessment order for AY 2017-18. For ready reference, said table is reproduced as under: Extrapolated Amount (in Rs. Project | 2013-14 2014-15 2015-16 2016-17 2017-18 Total (in Rs.) Aniket 1,05,11,704 4,16,45,786 5,21,57,490 Anjali 22,61,056 70,45,612 2,51,68,668 3,44,75,336 Deep 2,11,74,805 3,19,58,660 41,67,120 2,91,67,155 2,57,78,685 11,22,46,425 Height 3,16,07,198 1,64,31,590 1,99,80,352 1,81,70,642 8,61,89,782 Jtyot 2,33,700 47,52,720 36,86,310 25,41,795 17,35,530 1,29,50,055 Kund 52,18,598 88,78,394 13,67,87,296 3,23,08,834 18,31,93,122 Kutir 2,51,41,634 1,81,82,696 6,16,94,262 10,50,18,592 OJA 20,39,832 40,79,664 1,53,48,492 1,99,42,260 4,14,10,248 Sejal 2,07,30,360 5,88,61,968 3,09,04,916 79,07,492 11,84,04,736 Shakutala 1,29,59,550 1,39,68,444 1,60,53,120 38,46,060 4,68,27,174 Sweet Seven 13,22,392 91,16,064 1,56,82,303 32,07,504 2,93,28,263 Walawalkar 93,81,042 93,81,042 Total 2,14,08,505 11,05,89,310 14,65,92,244 30,22,05,441 25,07,86,765 83,15,82,265 4.4 The Assessing Officer justified the extrapolation for the reason that during the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wherever difference between the agreement value for sale of the flats and stamp duty value recorded in registered sale deed of the flat was found. The addition u/s 43CA of the Act has been worked out at Rs. 1,08,40,272/- for AY 2017-18. 5. On further appeal, the assessee challenged the reassessment proceedings u/s 153C of the Act for assessment year 2013-14 to 2016-17 and challenged the addition on merit in all the years including AY 2017-18. The assessee challenged that in absence of any incriminating material belonging or pertaining to the assessee or any information contained therein relating to assessee, found or seized in the search of searched person, no addition could have been made in the hands of assessee, in respect of unabated assessment years. The Ld. CIT(A) rejected the contention of the assessee challenging the validity of the assessment proceedings u/s 153C of the Act holding that the seizure of the cash and the admission by Shri Ishwardev Shukla that such cash is unaccounted for, was the starting point of the entire proceedings and the survey action had only taken place to strengthen/validate/corroborate his finding and there being a complete interlinked and nexus b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Supreme court in the case of CIT v. Jasjit Singh (2023) 155 Taxmann.com 155 (SC). 7. In respect of assessment years 2013-14 to 2016-17, the Ld. counsel for the assessee relied on the Hon ble Supreme Court in the case of CIT v. Sinhgad Technical Education Society (2017) 397 ITR 344 (SC) wherein it is held that for invoking section 153C of the Act the incriminating material which was seized in the case of searched person should pertains to the assessment year in question. The Ld. counsel submitted that only cash of Rs. 12.26 lakhs was issued from Shri Ishwardev Shukla and for which no addition has been made by the Assessing Officer. In the assessment years in question from AY 2013-14 to 2016-17, the On-Money received appearing in the impounded material ( which has been further extrapolated by AO ) has been made basis for addition and net profit has been estimated on the basis of the presumption without any evidence on record and therefore, the assessment has been completed without there being any incriminating material seized during the course of the search, qua the assessment years therefore, entire proceedings u/s 153C of the Act for assessment years 2013-14 to 2016-17, is wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit rate on assumption . There is no reference of any documents in assessment orders, which are seized from Shri Ishwardev Shukla during the course of the search action him at premises of AIU Wing, Airport Mumbai. 8.2 Regarding the assessment years 2013-14 to 2016-17, the Ld. counsel for the assessee has relied on the decision of Hon ble Supreme Court Sinhgad Technical Education Society (supra). The Hon ble Supreme Court held that incriminating material which was seized had to pertain the assessment year in question. The relevant finding of the Hon ble Supreme Court is reproduced as under: 14. We have bestowed our due consideration to the respective submissions of the counsel for the parties. 15. At the outset, it needs to be highlighted that the assessment order passed by the AO on August 7, 2008 covered eight Assessment Years i.e. Assessment Year 1999-2000 to Assessment Year 2006-07. As noted above, insofar as Assessment Year 1999-2000 is concerned, same was covered under Section 147 of the Act which means in respect of that year, there were re-assessment proceedings. Insofar as Assessment Year 2006-07 is concerned, it was fresh assessment under Section 143(3) of the Act. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that 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. 20. Insofar as the judgment of the Gujarat High Court relied upon by the learned Solicitor General is concerned, we find that the High Court in that case has categorically held that it is an essential condition precedent that any mone ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In dealing with such situation and the peculiar facts that the Delhi High Court upheld the satisfaction and the Delhi High Court found that the machinery provided under section 153C read with section 153A equally facilitates inquiry regarding existence of undisclosed income in the hands of a person other than searched person. The provisions have been referred to in details in dealing with a challenge to the legality and validity of the seizure and action founded thereon. We do not find anything in this judgment which would enable us to hold that the tribunal's understanding of the said legal provision suffers from any error apparent on the face of the record. The Delhi High Court judgment, therefore, will not carry the case of the revenue any further. We, thus, do not find any merit in these appeals. 8.3 The basis of the addition by the Assessing Officer for the years under consideration from assessment years 2013-14 to 2016-17 is only the material impounded during the course of the survey, which is evident from para 9 to 9.3 of the Assessing Officer reproduced as under : 9. Before going into the facts of the case, it is desirable to know the nature of evidences impounded by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itten pages 1 to 175 marked as Annexure A-2. I confirm that Annexure A2 is impounded from this premise ie. 1st Floor, Sheetal Kripa Building, Beside Saraswat Co.Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai-400063. Q20. Kindly explain the contents of the diary (Red Colour) marked as AnnexureA-2? A. Sir, the said diary is having date-wise entries of cash receipt and cash payments for the financial year F.Y. 2016-17. Each page of this diary is having the details of cash receipts and cash payments with the name of the person and amount of transactions.. These transactions were not recorded in regular books of account for F. Y.2016-17. Q21. Kindly provide the source of these cash receipt and their complete details? A. Sir, these cash deposits are mainly cash receipts from the sale of flats, cashloans taken etc. I will provide the complete details in due course. Q22. I am showing you Green and White Colour Diary having written pages 1 to 72 marked as Annexure A-3. Please confirm that the same is impounded from this premise i.e. 1st Floor, Sheetal Kripa Building, Beside Saraswat Co. Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai-400063. A. I have gone through Green and White ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Beside Saraswat Co.Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai-400063. Q29. Kindly explain the contents of the Grey Colour Diary marked as AnnexureA-6? A. Sir, I do not know the exact contents of this diary. I will provide the complete details in due course. Q30. I am showing you Red Colour Dhanlaxmi Notebook having written pages Ito 158 marked as Annexure A-7. Please confirm that the same is impounded from this premise te. Ist Floor, Sheetal Kripa Building, Beside Saraswat Co.Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai-400063. A. I have gone through Red Colour Dhanlaxmi Notebook having written pages 1 to 158 marked as Annexure A-7. I confirm that Annexure A-7 is impounded from this premise i.e. Ist Flor, Sheetal Kripa Building Beside Saraswat Co.Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai-400063. Q31. Kindly explain the contents of the Red Colour Dhanlaxmi Notebook marked as Annexure A-7? A. Si, I do not know the exuet contents of this diury. I will provide the complete details in due course. Q32. I am showing you Yellow Colour Receipt Book having written pages 1 to 56 marked as Annexure A-8. Please confirm that the same is impounded from this premise i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h. receipts and cash payments from different parties. It has mentioned date wise entry of cash receipts and payments for the Financial years 2015-16 and F.Y. 2016-17 (till date) for DGS Group. 0.8 What are the source of cash receipts mentioned in diaries marked as Annexure A-1 and Annexure-2? Ans: sir, 1 am not aware of the source of these cash receipts. I am doing entry as and when instructed by shr Ishwardev shukla. He only instructs to enter the entries when cash is received and paid in the group concerns. 9.3 It is seen that Shri Ishwardev D. Shukla had admitted that the impounded materials in Annexure A-1 A-12 contains unaccounted entries related to cash receipt and paid by the group companies in various projects related to F.Ys. 2015-16 and 2016-17 respectively. With regard to impounded materials in Annexure A-13, it was stated that the entries related to cash receipts on account of flat bookings by customers in different projects of D.G. Land Developers Pvt. Ltd. With regard to Annexure A-14, it was stated that it includes brokerage file to be paid to brokers or broker firm for the flats or property sold by acting as agent on our behalf. Thus, it was specifically submitted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing section 153C/153A of the Act. Even for a moment, it is presumed that cash found was undisclosed income for AY 2017-18 i.e. the year in which cash was found, no addition can be made in AY 201314 to AY 2016-17. Therefore, additions made by the AO for AYs 2013-14 to AY 2016-17, without there being any incriminating material found in search, are deleted. The legal ground challenging validity of assessment made u/s 153C for AY AYs 2013-14 to AY 2016-17 are accordingly allowed. 9. Now, we take up the additional ground raised in AY 2017-18. The contention of the assessee is that six preceding assessment years for invoking section 153C of the Act have been taken by the AO from AYs 2016-17 to AY 2010-11, corresponding to six assessment years, preceding the assessment year in which search was conducted on searched person. The ld counsel for the assessee relied on the decision of the Hon ble Supreme Court in the case of Jasjit Singh (supra) wherein it is held that application of the first proviso to section 153C(1) of the Act would not only be confined to question of abatement, but also with regard to the date from which the six years period was to be reckoned in respect of which the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003 [but on or before the 31st day of March, 2021], the Assessing Officer shall (a)issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years and for the relevant assessment year or years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139; (b)assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made and for the relevant assessment year or years : XXX 153C. Assessment of income of any other person. (1) Not with standing anything contained in section 139, section 147, section 148, section 149, section 151 and section 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 153C, which provides for the assessment of income of any other person, i.e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the Assessing Officer having jurisdiction over the other person. Thereafter, the Assessing Officer having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess or reassess the income of such other person in the, manner contemplated by the provisions of Section 153A. Now a question may arise as to the applicability of the second proviso to Section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search under Section 132 or the requisition under Section 132A. For instance, in the present case, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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