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TMI Blog2024 (12) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... eration of this Court and crystallized in the Court s order dated 12.04.2023 are as under:- D. Whether Hon'ble ITAT has erred in considering Section 153C restricts assessment beyond the documents considered for deriving satisfaction note for starting the proceedings of the other person? E. Whether Hon'ble ITAT has erred in considering Section 153C restricts assessing officer to enquire beyond the documents considered for deriving satisfaction note for starting the proceedings of the other person? 3. Search and seizure operations under Section 132 of the Income Tax Act, 1961 were conducted in the case of Taneja-Puri Group of cases in various premises on 05.01.2009. During the course of the said search, incriminating material in relation to the respondent were unearthed. Significantly, the premises of respondent company were also covered under a survey operation covered under Section 133-A of the Act. 4. The facts as far as AY 2007-08 is concerned, are that a notice under Section 153C was issued to the Assessee. In response to the said notice, respondent filed its return of income on 20.10.2010, declaring current year income of Rs. 53898676/-, which was fully setoff against u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Income Tax (Appeals) [ CITA ] . Vide order dated 22.06.2012, the First Appellate Authority held as follows:- a. Addition of Rs. 64,34,57,334/- on account of fresh claim of brokerage and interest charges was confirmed. The respondent is engaged in the business of development and construction of Integrated Township in Kundli at Sonipat. Further the respondent has been following percentage of completion method with respect to separate Township and is recognising the sales from the project only when a certain percentage of estimated cost of construction in the said project is completed . The said method is in accordance with the standards issued by the Institute of Chartered Accountants of India and therefore on the same the cost of interest/brokerage relatable to each of the project being direct cost of construction had been rightly capitalised by the respondent. Hence now it is not open for the Respondent to make Fresh claim for deduction of these expenditures for the year under consideration. b. The addition made by the assessing officer on the strength of papers discovered at the respondent premises in relation to Arvindj was confined to Rs. 80,00,000/-, instead of Rs. 1,15,00,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded under oath, wherein he admitted purchasing land on behalf of Taneja Group from farmers and received payment from the group for his services. The assessing officer made the addition to the tune of 20% of Rs. 1,72,60,000 paid in cash by the respondent, under the provisions of section 40A (3) and Rs. 71,04,000/- which could not be satisfactorily explained by the respondent. c. Addition of Rs. 50,00,000/- on account of loose papers found at 28 Prithviraj Road during the course of search. The said paper contained details of land purchase from one Chacha Mange Ram for the project at Kundli and is written by DN Taneja the chairman of the respondent, in his own handwriting. The said amount represented the payment made by the Respondent outside the books of accounts. d. Denial of claim for deduction under S. 80(IB) of Rs. 7,76,97,104/- as the respondent, had violated conditions (c) of Section 80 18(10) of the Act. It is submitted that the housing project being developed by the respondent consists of different categories of flats having different built-up area. Since the housing project of the respondent is located within a distance of less than 25 kilometres from Delhi, the built up ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he seized documents recorded in the satisfaction note prior to exercising jurisdiction under Section 153C of the Act, do not belong to the respondent, and thus, ITAT has erroneously concluded that the additions were made on the basis of survey proceedings exclusively and ignored the disallowance of brokerage and interest expenses undertaken by the respondent only in response to the return filed under Section 153C and not claimed previously in the original and the revised return. 15. As far as the present appeals are concerned, the question is whether AO s assumption of jurisdiction under Section 153C of the Act qua the assessee was justified on the facts and circumstances of the case. 16. A predecessor Bench of this Court in CIT v. Kabul Chawla (2015) 61 Taxman.com 412/234 Taxman 300/[2016] 380 ITR 573/281 CTR 45 (Delhi) held that if no incriminating material is found during the course of the search in respect of an issue, then no addition in respect of such an issue can be made in the assessment under Sections 153A and 153C of the Act. The legal position summarized in the subsequent decision of Pr. CIT v Meeta Gulgutia [2017] 82 Taxmann.com 287/248 Taxman 384/395 ITR 526/295 CTR 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. 17. In ClT v. RRJ Securities Ltd. [2015] 62 taxmann.com 391/[2016] 380 ITR 612/282 CTR 321 (Delhi)/2015 SCC Online Delhi 13085 , it has been held as under:- 36. The decision in SSP Aviation (supra) cannot be understood to mean that the AO has the jurisdiction to make a re-assessment in every case, where seized assets or documents are handed over to the AO. The question whether the documents/assets seized could possibly reflect any undisclosed income has to be considered by the AO after examining the seized assets/documents handed over to him. It is only in cases where the seized documents/assets could possibly reflect any undisclosed income of the Assessee for the relevant assessment years, that further enquiry would be warranted in respect of those years. Whilst, it is not necessary for the AO to be satisfied that the assets/documents seized during search of another person reflect undisclosed income of an Assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purposes of determining escapement of income of the Assessee for the AYs in question. Consequently, even if those two documents can be said to 'belong' to the Assessee they are not documents on the basis of which jurisdiction can be assumed by the AO under section 153C of the Act. 19. In CIT v. Radhey Shyam Bansal [2011] 11 taxmann.com 294/200 Taxman 138/337 ITR 217/243 CTR 375 (Delhi)/2011 SCC Online Delhi 2495 , it was observed as under:- 21. The word 'satisfaction' has not been defined in the Act. The satisfaction' by its very nature must precede before the papers/documents are sent by the Assessing Officer of the person searched to the Assessing Officer of the third person. Mere use or mention of the word 'satisfaction' in the order/note will not meet the requirement of concept of satisfaction as used in section 158BD. The satisfaction has to be in writing and can be gathered from the assessment order, if it is so mentioned/recorded, or from any other order, note or record maintained by the Assessing Officer of the person searched. The word 'satisfaction' refers to the state of mind of the Assessing Officer of the person searched, which gets ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material before him. The material itself should not be vague, indefinite, distinct or remote. If there is no rational or intangible nexus between the material and the satisfaction that a third person has undisclosed income', the conclusion would not deserve acceptation. Then the satisfaction is vitiated. It is to this limited extent that the satisfaction can be gone into and examined. The satisfaction though subjective, must meet the aforesaid criteria. 20. Prior to its amendment w.e.f. 01.06.2015, Section 153C of the Act read as under:- 153C. Assessment of income of any other person Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person, 21. The reason for introducing the amendment in Section 153 was considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r this purpose it would be necessary to examine the provisions of presumptions as indicated above. Section 132 (4A) (i) clearly stipulates that when inter alia any document is found in the possession or control of any person in the course of a search it may be presumed that such document belongs to such person. It is similarly provided in Section 292C (1) (i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or satisfaction that the document in fact belongs to somebody else. There must be some cogent material available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of satisfaction. 17. In the present case the search took place on 5th January 2009. Notice to the Assessee was issued under Section 153 C on 19th November 2010. This was long prior to 1st June, 2015 and, therefore, Section 153C of the Act as it stood at the relevant time applied. In oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of search or has been recorded in the satisfaction note by the Assessing Officer, and therefore, none of these additions can be made in the proceedings u/s. 153C. The argument raised by the Id. CIT-DR stands answered in view of the aforesaid decisions of the Hon ble Jurisdictional High Court and moreover none of these additions are based on documents belonging to the assessee and what ld. CIT-DR is trying to canvass before us that, even if the seized documents pertaining or containing information that relates to the assessee is sufficient enough. This issue stands answered by the Hon ble Jurisdictional High Court in the case of PCIT vs. Build Well Pvt. Ltd . and moreover looking to nature of addition also none of these additions are based on any satisfaction note. Thus, we do not find merits in the contention raised by the ld. CIT-DR. Accordingly, all the additions which are based on survey documents stands deleted being beyond the scope of proceedings u/s. 153C. 23. Keeping in view of the aforesaid, we are of the opinion that the question of law raised in the present appeals has already been settled by the earlier Division Bench of this Court in Kabul Chawla (supra) and Dreamc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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