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TMI Blog2024 (12) TMI 391X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer of the searched person. Hon ble Supreme Court in case of CIT vs. Jasjit Singh [ 2023 (10) TMI 572 - SUPREME COURT] has considered the aspect of recording the satisfaction by the Jurisdictional Assessing Officer by holding that the period of six years would be reckoned in respect of which the returns were to be filed would be from the date of receipt of material by the Jurisdictional Assessing Officer. In view of the above dictum of law, the period of six years to be computed would be from the date when the material was forwarded to the jurisdictional Assessing Officer which can be either 31.03.2018 or 02.04.2018 or 23.10.2019 and accordingly, the Assessment Years for which, the notices can be issued would be in first scenario from A.Y. 2012-13 to 2017-18, in the second scenario from 2013- 14 to 2018-19 and in third scenario from 2014-15 to 2019-20. The period of 10 years is to be considered on the basis of harmonious interpretation of section 153C and its proviso to the effect that the commencement of initiation of the assessment proceedings is required to be considered from the date when the satisfaction is formed by the AO of the petitioner. Therefore, applying the secon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent vide letter dated 25.11.2019. As per the satisfaction note, for initiation of the assessment proceedings under section 153C of the Act, it is revealed that during the course of search at the office premises of M/s. Venus Infrastructure and Developers Pvt Ltd and Shri Ashok S. Vasvani for Venus Group on 10.03.2015, various loose papers, documents and digital data were seized and 11 documents pertaining to the petitioner were identified. 5. The respondent who is Assessing Officer of the petitioner, recorded satisfaction note on 23.10.2019 for initiation of the assessment proceedings under section 153C of the Act for the Assessment Years 2009-10 to 2014-15 in respect of each of the Assessment Year falling within six Assessment Years immediately preceding the Assessment Year relevant to previous year in which the search was conducted. 6. The respondent in the satisfaction note dated 23.10.2019 has recorded that from analysis of seized material and digital evidence it was gathered that the petitioner is one of the purchasers of the property in the project as stated in the registered deed which has been developed by Venus Group in which, cash has been paid to Venus Group in va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. after more than four years from the date of the search and one and half years from the date of the satisfaction note recorded by the Assessing Officer of the searched person. 9. It was therefore submitted that as the satisfaction note ought to have been recorded at the time of search along with initiation of the proceedings against the searched person and in view of the facts of the case, as the same is recorded only after more than three years from the date of search, such satisfaction note is therefore, time barred. Reliance was placed on the decision of CIT vs. Jitendra H. Modi vs. reported in 403 ITR 110 (Guj.) and in case of Commissioner of Income Tax vs. Bharat Bhushan Jain reported in 370 ITR 695 (Delhi). 10. It was further contended that the impugned notices are also time barred for the reason that six years must be computed from the date when the materials were forwarded to the jurisdictional Assessing Officer. Reliance was placed on the decision of the Hon ble Supreme Court in case of CIT vs. Jasjit Singh reported in 458 ITR 437 (SC). It was submitted that as per the decision of the Hon ble Apex Court, three situations would arise as under : (a) If the date of receivin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner leading to the belief that there is unaccounted income. It was submitted that the satisfaction note only refers to the documents found during the course of the search from the Venus Group and it only says that in case of the petitioner Rs. 4.8 Crore on-money was paid without referring to any incriminating material against the petitioner. Reliance was placed on the following decisions: a.Principal Commissioner of Income Tax vs. Abhisar Buildwell (P.) Ltd reported in 454 ITR 212(SC) b.Sri Sai Cashews reported in [2021] 131 taxmann.com 177 (Orissa) c.Principal Commissioner of Income Tax vs. Vikas Telecom Ltd reported in [2022] 135 taxmann.com 362 (Delhi) d.Sunway Realtech (P.) Ltd reported in [2022] 142 taxmann.com 477 (Delhi) 14. Per contra, learned Senior Standing Counsel Mr. Varun Patel for the petitioner submitted that separate satisfaction notes are recorded by the Assessing Officers. It was pointed out that search was conducted on 10.03.2015 at 17 premises of Venus Group of Ahmedabad and the last warrant of authorization was excluded during the month of May, 2015 relevant to Financial Year 2015-16 and therefore, time limit to pass the Assessment Order under section 153A of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers to the assessment or re-assessment of the income of the other person in accordance with the provision of section 153A and as per the second proviso to section 153A of the Act which has been inserted by the Finance Act 2017 w.e.f. 01.04.2017, relevant assessment year has been explained as per the Explanation-1 to mean an assessment year preceding the Assessment Year relevant to the previous year in which, the search is conducted or requisition is made which falls beyond six years but not later than ten Assessment Years from the end of the Assessment Year relevant to the previous year in which the search is conducted or requisition is made if the escaped assessment amount amounts to or is likely to amount to Rs. 50 Lakh or more. It was therefore, submitted that in the facts of the case, the respondent-Assessing Officer has arrived at the satisfaction that there is likely escapement of income of Rs. 4,80,25,000/- in the Financial Years 2010-11 and 2011-12. It was therefore, submitted that even applying the decision of the Hon ble Apex Court in case of CIT vs. Jasjit Singh (supra), the impugned notices are to be considered as issued for Assessment Years covering the period of ten A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfaction was recorded in 2019 after amendment to 153C by the Finance Act,2017 came into effect, block period of six assessment years would get extended to ten Assessment Years. 21. Reliance was placed on the decision of the Jitendra Mansukhlal Adesara vs. Assistant Commissioner of Income Tax reported in [2021] 126 Taxman.com 150 (Guj.) wherein it is held by this Court that when the Assessing Officer is satisfied, the documents containing the details in the seized material from the searched person and such material pertains to the petitioner, it cannot be said that the mandatory requirements of section 153C of the Act have not been complied with. 22. It was therefore, submitted that as per the mandate of section 153C of the Act, notice is required to be issued for 10 Assessment Years which would cover the Assessment Years 2011- 12 and 2012-13 even if after applying the decision in case of CIT vs. Jasjit Singh (supra). 23. Reliance was placed on the decision of the Hon ble Apex Court in case of Commissioner of Income Tax vs. Vijay N. Chandrani [2013] 35 taxmann.com 580 (SC) wherein it is held that the petitioner is not entitled to invoke the writ jurisdiction of the High Court wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person under section 1S8BC of the Act; or (b) in the course of the assessment proceedings under section 158BC of the Act; or (c) immediately after the assessment proceedings are completed under section 153BC of the Act of the searched persona. 3.Several High Courts have held that the provisions of section 153C of the Act are substantially similar/parimateria w the provisions of section 158BD of the Act and therefore, the above guidelines of the Hon'ble SC, apply to proceedings u/s 153C of the IT Act, for the purposes of assessment of income of other than the searched person. This view has been accepted by CBDT. 4.The guidelines of the Hon'ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the other person is one and the same, then also he is required to record satisfaction as has been held by the Courts. 5.in view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgment. Accordingly, the Board hereby directs that pending l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other per- son, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d.(supra), whether the incriminating material is received in either of the three scenarios, the Assessment Years 2011-12 and 2012-13 would be covered within the period of 10 years to be reopened under section 153C read with section 153A of the Act. The Hon ble Delhi High Court has held in the said case as under : 7. It becomes pertinent to note that as those provisions stood prior to Finance Act, 2017, the relevant assessment years which could be thrown open pursuant to a search stood at six assessment years. By virtue of Finance Act, 2017 the block period for search assessment stood extended to ten assessments years on account of the introduction of the concept of relevant assessment year or years . That expression came to be defined by Explanation 1 to Section 153A as extending to the period which falls beyond six assessment years but not later than ten assessment years from the end of the AY relevant to the previous year in which the search was conducted or requisition made xxxxx 9. As is manifest from the above, clause (c) of that Proviso clearly stipulates that no notice for assessment or reassessment for the relevant assessment year or years could be issued if a search had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e submission of Mr. Mann were to be accepted, it would amount to the Court carving out an exception in respect of those cases where the jurisdictional AO of the searched and non-searched entity were the same. This would also lead and constrain the Court to restrict the application of the First Proviso to Section 153C (1) of the Act only to those cases where the AO of the non-searched entity be one different from that of the searched person. This would clearly amount to a reconstruction of Section 153C and creating an exception which the Legislature chose not to introduce. 17. The First Proviso to Section 153C (1) has been consistently recognized as not being concerned merely with the aspect of abatement, which is spoken of in the Second Proviso to Section 153A (1) of the Act, but also to regulate the date from which the sixyear period or the relevant assessment year insofar as the nonsearched entity is concerned, is to be reckoned. This position has been consistently followed not just by this Court but also by the Supreme Court in Commissioner of Income Tax 14 vs. Jasjit Singh .. 18. Insofar as the present appeal is concerned, on facts we find that while it is true that AO of the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the same, it would be the formation of an opinion that the material is likely to have a bearing on the determination of the total income.. which would constitute the core and the heart of Section 153C. 21. A harmonious interpretation of the main part of Section 153C and its Proviso lead us to hold that in cases where the jurisdictional AO is common, the commencement point would have to be construed as the date when the satisfaction is formed by the said AO with respect to such other person. In our considered view, even though there may not have been an actual exchange of material unearthed in the course of the search between two separate authorities, it would be the date when the AO records its satisfaction with respect to the non- searched entity which would be of seminal importance and constitute the bedrock for commencement of action under Section 153C. 31. From the above analysis of section 153C read with section 153A and its proviso carried out by the Hon ble Delhi High Court, the period of 10 years is to be considered on the basis of harmonious interpretation of section 153C and its proviso to the effect that the commencement of initiation of the assessment proceedings i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt assessment year or years referred to in sub-section (1) of section 153A . For the purposes of understanding the meaning to be assigned to the expression relevant assessment year, we would have to necessarily travel back to Explanation 1 as placed in Section 153A. The submission, therefore, that Section 153C would only extend to six assessment years immediately preceding the AY relevant to the financial year in which the search took place is wholly untenable. 14. These aspects are in any case no longer res integra having been duly considered by this Court as well as the Supreme Court right from the time judgment came to be rendered in SSP Aviation Ltd. vs. Deputy Commissioner of Income Tax8 and ending with the authoritative pronouncement of the Supreme Court in Commissioner Income Tax vs. Jasjit Singh. More importantly, the precedents rendered in the context of the First Proviso to Section 153C have unequivocally held the same not merely intended to deal with the subject of abatement but also determinative of the relevant date for the purposes of computation of the six or the ten assessment years as the case may be . 15. Though not so articulated, it appears that the contention o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also been collated in the form of a chart which stands extracted in the Section 142(1) notice dated 01 March 2024. The said chart is extracted hereinbelow : - AY Amount in crores 2020-21 Rs. 12.70 2019-20 Rs. 348.78 2018-19 Rs.4.19 2017-18 Rs.6.27 2016-17 Rs.32.44 2015-16 Rs. 39.77 2014-15 Rs.79.72 As is manifest from the above, there is specific reference to unaccounted transactions pertaining to AYs 2014- 15, 2015-16 and 2016-17. The aforesaid chart correlates with the material which stands noticed and forms part of the Satisfaction Note. More importantly, the amounts identified as relevant to the AYs' in question ex facie meet the prerequisites set out in the Fourth Proviso to Section 153A. We also take into consideration the indubitable fact that the cumulative figure attributed to income which has allegedly escaped assessment would stand at approximately INR 520 crores. 21. That then takes us to the argument of invocation of the Fourth Proviso to Section 153A. In our considered opinion, the Fourth Proviso mandates that the AO must have in his possession material which reveals that income exceeding INR 50 lakhs or more has escaped assessment in the relevant AY or AYs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment for a block period of ten years, it would clearly not be incumbent upon it to draw separate or independent satisfaction notes for each AY. A composite Satisfaction Note would suffice the requirements of Section 153C of the Act provided it embody details of the material gathered in the course of the search and pertaining to the AYs forming part of the block as a whole. As long as the common Satisfaction Note includes sufficient particulars of the incriminating material relevant to the block of AYs', the same would, in our considered opinion, satisfy the statutory requirement as imposed by the Act. Singhad Technical Education Society as also the decision of the Supreme Court in Principal Commissioner of Income Tax, Central-3 vs. Abhisar Buildwell P. Ltd10 speak of incriminating material being found and which may impact the estimation of income likely to have escaped assessment for a particular AY. As we read and go through the Satisfaction Note as well as the orders disposing of objections, it is manifest that the respondent has rested its decision on incriminating material found for AYs 2014-15, 2015-16, 2016-17 and stretching up to AY 2020-21. 24. The provision only requi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise. (iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the total income of the aforementioned six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six assessment years in which both the disclosed and the undisclosed income would be brought to tax . (iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of the seized material. (v) In the absence of any incriminating materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er on 28 and 30 June 2023. These writ petitions came to be preferred long thereafter on 19 March 2024. We take note of the statutory timeframes stipulated under Section 153B of the Act for completion of assessment proceedings and more particularly the Second and Third Proviso's which mandate assessment itself being completed within twelve months from the time when the books of account or material is handed over to the AO of the non-searched person. This would mean that in the present case and taking the date of handing over or recordal of satisfaction as constituting the date from which that period is liable to be reckoned, the assessment is liable to be completed by 31 March 2024. 33. In view of the above conspectus of law, decisions cited by the learned advocate for the petitioner are duly considered in the above decisions and hence they are not dealt with again. 34. We are therefore of the opinion that the impugned notices cannot be said to be time barred considering the extended period of 10 years from the Assessment Year 2018-19 upto Assessment Year 2009-10 considering the previous year in which, considering the date of receiving books of accounts or documents or assets se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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