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TMI Blog2024 (11) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... ictional provisions of section 153C of the Act by excluding AY 2021-22 from the ambit of section 153C of the Act erroneously based on actual date of search rather than based on date of receipts of incriminating documents. In order to frame assessment based on the searched document, the notice ought to have been issued under section 153A r.w.s. 153C of the Act. The regular assessment passed by issuance of notice u/s 143(2) of the Act without aid of section 153C of the Act despite satisfaction note from AO of searched person thus, is not supportable in law. The impugned assessment framed under section 143(3) of the Act thus, is void ab-initio as rightly pleaded on behalf of the assessee. Hence, the assessment order passed is vitiated in law and requires to be quashed at the threshold. Assessee appeal allowed. - Shri Pradip Kumar Kedia, Accountant Member And Shri Vimal Kumar, Judicial Member For the Appellant : Shri Suresh Gupta, CA For the Respondent : Shri Amit Shukla, Sr. DR ORDER PER PRADIP KUMAR KEDIA, AM : The instant appeal has been filed at the instance of the assessee seeking to assail the First Appellate order dated 08.02.2024 passed by Ld. Commissioner of Income Tax (A)-3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Preet Vihar, Delhi for INR 49,00,000/- and invested the sale proceeds in purchase of capital gain bonds u/s 54EC of the Act of the same amount and thus, declared capital gains from property at NIL. The case of the assessee was subjected to scrutiny assessment u/s 143(3) of the Act. In the course of assessment, in a show cause notice dated 15.11.2022, the Assessing Officer ( AO ) referred to search conducted at the premises of one Shri Praveen Kumar Jain, a third party and also referred to a kachchi parchi image which is stated to be found from the mobile phone of Shri Vaibhav Jain which is allegedly pertain to sale of property at Preet Vihar, Delhi. The assessee filed reply and denied any privy to such kachchi parchi found on the mobile phone of such party. The AO however, relied upon some whatsapp chat and held that the assessee has under reported sale consideration on sale of Long Term asset being property at Preet Vihar, Delhi to the tune of INR 1,05,50,000/-. The AO re-computed the Long Term Capital Gain ( LTCG ) and made addition of INR 97,37,300/- at estimated sale consideration based on kachchi parchi. The income was accordingly, assessed at INR 1,04,36,200/- u/s 143(3) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rson sent intimation about the whatasap chat to the AO on 28.06.2022. On that basis, the AO was inclined to reopen the assessment for six AY's including AY 2021-22 under section 153C of the Act. But having done so, the AO took the view that since the year under consideration is search year, he proceeded with the assessment u/s 143(3) of the Act. [ii] that it is a settled law that when provisions of proviso to section 153C are applied, then date of search is substituted by date of handing over of the documents by the Assessing Officer of the person searched to the Assessing Officer of the other person (present assessee). This date was 28.06.2021 which fell in the previous year 2021-22 and the relevant assessment year was 2022-23. [iii] in terms of the recording of satisfaction under Section 153C of the Act, i.e., 30.06.2021 by the AO 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 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. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid legal position also stood reiterated by the Supreme Court in Vikram Sujitkumar Bhatia. The submission of the respondents, therefore, that the block periods would have to be reckoned with reference to the date of search can neither be countenanced nor accepted. E. The reckoning of the six AYs' would require one to firstly identify the FY in which the search was undertaken and which would lead to the ascertainment of the AY relevant to the previous year of search. The block of six AYs' would consequently be those which immediately precede the AY relevant to the year of search. In the case of a search assessment undertaken in terms of Section 153C, the solitary distinction would be that the previous year of search would stand substituted by the date or the year in which the books of accounts or documents and assets seized are handed over to the jurisdictional AO as opposed to the year of search which constitutes the basis for an assessment under Section 153A. F. While the identification and computation of the six AYs' hinges upon the phrase immediately preceding the assessment year relevant to the previous year of search, the ten-year period would have to be reckoned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reference to the challenge to the impugned assessment order passed under section 143(3) of the Act in question, the Ld. Counsel for the assessee also contended that such order being covered u/s 153B(1)(b) of the Act, the approval u/s 153D of the Act was incumbent upon the assessee. The approval in the instant case has been taken from the Ld. Addl. CIT u/s 119 of the Act and not under section 153D of the Act, rendering such assessment order to be invalid. The gist of the submissions made on the point in issue on behalf of the assessee is noted hereunder:- As per the provisions of section 153D of the Act, no order of assessment / reassessment for any AY's relating to the search action u/s 132 of the Act could have been passed by the AO without prior approval of the Joint Commissioner. To be precise, the requirement of the approval under above provision is in relation to the assessment referred in clause (b) of section 153A(1) or those referred in clause (b) of section 1538 of the Act. The present assessment relates to AYY 2021-22 which covered by section 1538(1)(b) of the Act and that is the reason why the AO has completed the assessment u/s 143(3) treating the assessment being t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd on the materials and other attending circumstances on the basis of which the officer is making the assessment and after due application of mind and on the basis of seized materials, the superior authority have to approve the draft Assessment order. To support the above proposition of law, reliance is placed on following decisions: * Ajay Sharma, New Delhi vs DCIT, Ghaziabad ITAT Delhi - ITA.No.3554/Del./2015 dt.14.2.2020; * PCIT v. Sunrise Finlease (P.) Ltd. 252 Taxman 407 (Guj) (HC); * Shri Jaykumar Uttamchand Pokarna ITAT Pune -ITA NO. 549/PN/2011, dt.5.10.2012; * CIT vs. Shri. Akil Gulamali Somji ITA (L) HC Bom NO.1416-19 OF 2012 dt. 15.1.2013 SC dismissed SLP no.19389 of 2013 on 5.8.2013; * Ch. Krishna Murthy ITA No. 766/Hyd/2012- dt.13.2.2015 The above legal ground had been dismissed by the Ld CIT(A) In para 9.3 page 29 of the Appellate order with the observation that since the Impugned order is not u/s 153C of the Act and therefore there was no requirement for the AO to obtain prior approval u/s 153D of the Act. The above view of the Ld CIT(A) Ld CIT(A) is contrary to the provisions of the section 153D of the Act which requires the prior approval even in the cases where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, the assessee herein has purchased a property in which some cash component is involved and such information/document etc. has bearing on the determination of total income of other person namely, the assessee. 13.1. The relevant satisfaction note drawn by the AO of the searched person is reproduced as under:- 1. Name of the group, if any, searched HANS Group 2. Name of the searched assessee in whose case assets (money, bullion, jewellery or other valuable article or thing) or papers (books of account or documents) seized u/s 132 of the Act M/s. Jainco Ltd., G-5, Sikka Complex, Preet Vihar, New Delhi-110092. 3. PAN of searched person AADCJ6207E 4. Name and address of the person to whom seized assets/papers as in (2) above belong Smt. Mukul Rani Thakur, R/o-B-132, Preet Vihar, Delhi-110002. 5. PAN of the other persons AERPT3941E 6. Identification of seized assets/papers which in the opinion of the AO of the searched assessee (S.No.2), belong to the other person (S.No4) (i) cloned data of Vaibhav Jain s mobile marked as Annexure A-4 seized from the premise at G2, Plot No.5, Sikka Complex, Preet Vihar, New Delhi. 7. (i) Details of panchnama annexure through which relevant asset/docume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was taken, that during the search and seizure action, the seized Assets and documents/digital data and information contained therein relate to, Smt. Mukul Rani Thakur the person other than the searched person. The Assessing officer of the searched person has recorded his satisfaction dated 28.06.2022 that seized Assets and documents/digital, data and information contained therein relate to the assessee i.e. Smt. Mukul Rani Thakur Premises from where assets and documents/digital data found and seized: Premises at G-2, Plot No.5, Sikka Complex, Preet Vihar, New Delhi. Annexure Page No./File Description Remarks A-4 Cloned data of Vaibhav Jain s mobile i-phone. Cloned data of Vaibhav Jain's mobile marked as Annexure A-4 seized from the premise at G-2, Plot No. 5. Sikka Complex, Preet Vihar, New Delhi having the details of the actual sale consideration of the property at B-132, First Floor, Preet Vihar, and payments in cash thereof, it is noticed that, Smt. Mukul Rani Thakur has sold the above said property in which amount of Rs. 1,05,50,000/- was received in cash by Smt. Mukul Rani Thakur. 2. After examining the seized documents/digital data and information contained therein, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-22, the documents were handed over in the previous year relevant to Assessment Year 2022-23. Based on such matrix, the assessment upto Assessment Year 2021-22 stood covered within ambit of section 153C of the Act. This being so, domain for assessment qua undisclosed income for Assessment Year 2021-22 falls within sweep of section 153C of the Act. The AO has committed substantive error in proper appreciation of jurisdictional provisions of section 153C of the Act by excluding Assessment Year 2021-22 from the ambit of section 153C of the Act erroneously based on actual date of search rather than based on date of receipts of incriminating documents. In order to frame assessment based on the searched document, the notice ought to have been issued under section 153A r.w.s. 153C of the Act. 15. The regular assessment passed by issuance of notice u/s 143(2) of the Act without aid of section 153C of the Act despite satisfaction note from AO of searched person thus, is not supportable in law. The impugned assessment framed under section 143(3) of the Act thus, is void ab-initio as rightly pleaded on behalf of the assessee. Hence, the assessment order passed is vitiated in law and requires ..... X X X X Extracts X X X X X X X X Extracts X X X X
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