9911796707
TMI Blog2024 (12) TMI 384X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, 1961 (for short 'the Act') was carried out at the residence of Shri Ramesh Hemrajani and Shri Munish Hemrajani situated at 38/19, East Patel Nagar, New Delhi-110 008 on 02.01.2020. During the course of search proceedings, various documents including digital data were seized from the residential premises of assessee's Directors, which were compiled in annexures, namely, Annexure A-1 to A-27, apart from the cash and jewellery which were also found and seized from the abovesaid premises. 4. Further a survey action u/s 133A of the Act was also carried out in the case of assessee situated at 13-D, Gopala Tower, Rajendra Place, New Delhi-110 008 on 03.01.2020. During survey proceedings, various documents including digital data were impounded from the residential premises of assessee which were compiled in five annexures, namely, Annexure A-1 to A-5. Further statements u/s 132(4)/131(1A) of the Act were recorded on oath from many persons including directors of the assessee. 5. The Assessing Officer observed that on perusal of said incriminating documents, satisfaction was duly recorded for initiating proceedings u/s 153C of the Act in the case of the assessee for AYs 2010-11 to 2020 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich was alleged to be not recorded in our books of accounts, we would like to submit that the transactions referred by you are just the quotes / proposal given to various clients, however, the actual transactions has not taken place, most of the additional income mentioned the transactions referred in the how cause notice are just quotation / proposals given to the client / customers, without prejudice to the above you have mentioned the basis on which income is earned by the assessee company on foreign currency transaction. I would like to submit that the assessee company is engaged in the business of the Travel agency, providing travel related and other ancillary services. The Company is recognized by the Ministry of Tourism, Government of India, as a Tour Operator and Travel Agent. Apart from this Company, is a member of :- o International Air Transport Authority (IATA) o Indian Association of Tour Operators (IATO) o Travel Agent Association of India (TAAI) o Travel Agent Federation of India (TAFI) The revenue streams of the Company are as follows : o Ticketing o Passport & Visas o Hotel Booking o Customized services o Domestic train bookings o Travel Ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.1.8 From the perusal of above chart, it can be observed that the average profit margin rate (referral fees) on fore transactions varies from 0.13% to 0.36% which can be safely taken at 0.30% for calculating referral/ facilitation fees/ income of the assessee in respect of total value of forex transactions arranged by it. 7.1.9 Accordingly, by considering the rate @.3% on total forex transaction of Rs.34,97,000/ - as per Annexure A-11, referral income of Rs.10491/- was not offered for tax by the Assessee Company during the year and the same is added to its taxable income of the relevant year as business income. Further, as per annexure A-3, there was income of Rs.1,850/- on facilitation of forex transaction and assessee has calculated this amount in its submissions but not declared in its ITR, the same is also added back to total Income. (Addition of Rs.6,76,171/- + Rs.3,86,600 + Rs.10,491 + Rs.1,850 = Rs.10,75,112/-)" 8. Further Assessing Officer analysed the event management income and after analysing the submissions of the assessee, he determined the profit rate relating to event management/facilitation fees income @ 4%. Accordingly he proceeded to make the addition of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g proper opportunity of being heard. 8. On the facts and circumstances of the case and in law, the CIT (A) erred in not adjudicating the grounds of appeal on merit and is also against the principles of natural justice. 9. On the facts and circumstances of the case and in law, the notice u/s 153 C issued by the AO is bad-in-law, barred by limitation and without jurisdiction and, therefore, the said notice along with the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so. 10. On the facts and circumstances of the case and in law, the notice u/s 153C issued by the AO is illegal and without jurisdiction. The AO has not complied with the provisions of section 153C and other allied provisions for issuance of such notice. Accordingly, the notice u/s 153C along with the assessment order passed on the foundation of such notice are liable to be quashed and CIT(A) erred in not holding so. 11. On the facts and circumstances of the case and in law, the satisfaction note(s) recorded u/s 153C of the Act are bad-in-law and without jurisdiction and, accordingly, the assessment proceedings initiated on the foundation of such s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act is bad-in-law and without jurisdiction for the following reasons:- 1. In this satisfaction note there is reference to statements recorded u/s 131 during Survey. There is no reference to any statement u/s 132(4) during search. The statement u/s 131 recorded during survey cannot be said to be material found and seized during search and therefore, such statement cannot be a basis for initiation of proceedings u/s 153C of the Act. 2. The satisfaction recorded u/s 153C is vague as there is no reference to any seized material which may have bearing on the determination of total income. There is no year wise analysis of any seized material and how they have bearing on the determination of total income. The statutory requirement is that in the satisfaction note, the assessing officer has to record satisfaction that particulars seized material is incriminating in nature and to further record satisfaction that such seized material is likely to have a bearing on the determination of the total income of the 'other person'. In the present case, this statutory requirement has not been fulfilled. 3. The submission by the Ld. DR that during the course of assessment proceedings, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 153C. It would be relevant to recall that the Division Bench in Kabul Chawla had observed that in the absence of any incriminating material, a completed assessment may be reiterated and the abated assessment or reassessment be concluded. The importance of incriminating material was further underlined in Kabul Chawla with the Court observing that completed assessments could be interfered with, only if some incriminating material were unearthed. This aspect came to be reiterated in RRJ Securities when the Court held that it would be impermissible to either reopen or reassess a completed assessment which may not be impacted by the material gathered in the course of the search and which may have no plausible nexus. The aforesaid position also comes to the fore when one reads para 17 of ARN Infrastructure and which annulled an action aimed at reopening assessments for years to which the incriminating document which was found did not relate. 53. Sinhgad Technical Education Society also constitutes a binding precedent in respect of the aforesaid proposition as would be evident from the Supreme Court noticing that the material disclosed pertained only to AY 2004-05 or thereafter a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered is likely to inculpate the assessee. While in the case of a Section 153A assessment, the issue of whether additions are liable to be made based upon the material recovered is an aspect which would merit consideration in the course of the assessment proceedings, under Section 153C, the AO would have to be prima facie satisfied that the documents, data or asset recovered is likely to "have a bearing on the determination of the total income". It is only once an opinion in that regard is formed that the AO would be legally justified in issuing a notice under that provision and which in turn would culminate in the abatement of pending assessments or reassessments as the case may be. 65. We would thus recognize the flow of events contemplated under Section 153C being firstly the receipt of books, accounts, documents or assets by the jurisdictional AO, an evaluation and examination of their contents and an assessment of the potential impact that they may have on the total income for the six AYs' immediately preceding the AY pertaining to the year of search and the "relevant assessment year". It is only once the AO of the non-searched entity is satisfied that the material coming int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judgment, the writ petitions forming part of this batch, impugn the invocation of Section 153C in respect of AYs' for which no incriminating material had been gathered or obtained. The Satisfaction Notes also fail to record any reasons as to how the material discovered and pertaining to a particular AY is likely to "have a bearing on the determination of the total income" for the year which is sought to be abated or reopened in terms of the impugned notices. The respondents have erroneously proceeded on the assumption that the moment any material is recovered in the course of a search or on the basis of a requisition made, they become empowered in law to assess or reassess all the six AYs' years immediately preceding the assessment correlatable to the search year or the "relevant assessment year" as defined in terms of Explanation 1 of Section 153A. The said approach is clearly unsustainable and contrary to the consistent line struck by the precedents noticed above." In view of the above decisions of Jurisdictional high court and also the Apex court, the proceeding initiated in the present case of the appellant company before your honour is liable to be quashed. 6. There is yet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions and material placed on record. We observed that the search proceedings were initiated in the case of Sushen Mohan Gupta and others u/s 131 of the Act on 02.01.2020 and subsequently a survey action u/s 133A was initiated in the case of the assessee. Based on various informations available on record, the case of the assessee was initiated u/s 153C of the Act relying on various documents found in the case of Sushen Mohan Gupta and others. Based on the date of search initiated in the case of Sushen Mohan Gupta and others, the proceedings were initiated in the case of the assessee. However, as per the record, we noticed that satisfaction note was recorded by the Assessing Officer of the assessee only on 30.09.2021. Based on the date of satisfaction, the relevant assessment year for the assessee is AY 2022-23. Therefore, the date of search relevant for the assessee is only AY 2022-23, the AYs 2014-15 and 2015-16 are outside the provisions of section 153C of the Act. Therefore, it is a settled position of law relevant for assessment year under consideration. In the case of Raja Varshney vs. DCIT (supra) relied upon by ld. AR for the assessee, it is held as under :- "12. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 u/s 139; (b) Assess or reassess the total income or six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made: Provided that the AO shall assess or reassess the total income in respect of each assessment year falling within such six assessment years: Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years referred to in this subsection) pending on the date of initiation of the search u/s 132 or making of requisition u/s 132A, as the case may be, shall abate." 21. From the above, it is evident that as per clause (b) of subsection (1) of section 153A and second proviso, the AO can be issue notice for assessment or reassessment of total six assessment years immediately preceding the assessment year relevant to previous year in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -05 which is clearly barred by limitation. Therefore, issue of notice u/s 153C issued by the Revenue cannot be sustained on both the above counts, i.e., it is legally not valid as conditions laid down u/s 153C has not been fulfilled and it is barred by limitation. In view of the above, we quash the notice issued u/s 153C and consequently, the assessment completed in pursuance to such notice, is also quashed. 23. Since we have quashed the assessment order itself, the additions challenged by the assessee by way of other grounds of appeal do not survive, and, therefore, do not require any adjudication. 16. We thus, find that the issue raised in the additional ground has been answered in favour of the assessee, by the Coordinate Delhi Bench of the Tribunal in the case of DSL Properties (supra). 17. So far as decision of Hon'ble Delhi High Court in the case of SSP Aviation Ltd. vs. DCIT (supra) relied upon by the Id. CIT(DR) is concerned, we find that it is not helpful to the revenue as in that case also in para no. 14 of the judgment it has been held as under. 14. "Now there can be a situation when during the search conducted on one person u/s 132, some documents or valuabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive and, therefore, do not require any adjudication. 20. In the result, the appeal of the assessee is allowed." 13. From the above discussion the date of recording of the satisfaction will be the deemed date for the possession of the seized documents which is 03-10-2022 and six years would be reckoned from this date. The submission made by Ld AR is tenable that the assessment year relevant for previous year in which search was conducted in the case of the assessee will be AY 2023-24 and six years immediately preceding the assessment year relevant for u/s 153C of the Act will be AY 19 2018-19 to 2022-23. The assessment for AY 2021-22 should have been carried out by issuing notice u/s 153C of the Act and not u/s 143(2) of the Act. Therefore the assessment order dated 29-12-22 passed u/s 143(3) of the Act is bad in law and liable to be quashed and quashed accordingly. The additional grounds filed by the assessee are allowed." In view of the above, the assessment proceedings initiated for AYs 2014-15 and 2015-16 are quashed. 17. Coming to the revision proceedings initiated for AYs 2016-17 to 2020-21, we observed that the Assessing Officer has recorded the satisfaction as a single ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom whom it had received cash from FY 2013-14 onwards. The details are tabulated as under: S. No. Name of the client 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 Total sum of the Rows 1 Chaurasia 26778595 34913829 48477321 42074199 27093853 26837299 206175096 2 Makhija 0 0 0 0 0 1496969 1496969 3 Sushen/ Sushant Group 3197940 5341774 2190661 3418776 115886 0 14308012 4 Garg 18466007 21598854 20538191 26345425 18714181 36102744 141765402 5 Jain 7992067 9230271 23053716 11023104 1636291 12396346 65331795 6 Lalwani 31441964 32690829 52042654 38505930 26776947 32932372 214390696 TOTAL 87876573 103775557 146302543 121367434 74380133 109765730 643467970 In view of the above detailed facts, as well as upon analysis and examination of the seized as well as impounded material, I the undersigned being the jurisdictional assessing officer of Sh. Sushen Mohan Gupta & others (SMG Group) is satisfied that the seized documents (Annexures A-I to A-23) as well as in impounded documents (Annexures A-I to A-3 & A-S) do not pertain to and the information contained therein, do not relate to Sushen Mohan Gupta Group of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration of the structure of Sections 153A and 153C, we thus find that a reopening or abatement would be triggered only upon the discovery of material which is likely to "have a bearing on the determination of the total income" and would have to be examined bearing in mind the AYs' which are likely to be impacted. It would thus be incorrect to either interpret or construe Section 153C as envisaging incriminating material pertaining to a particular AY having a cascading effect and which would warrant a mechanical and inevitable assessment or reassessment for the entire block of the "relevant assessment year". 64. In our considered view, abatement of the six AYs' or the "relevant assessment year" under Section 153C would follow the formation of opinion and satisfaction being reached that the material received is likely to impact the computation of income for a particular AY or AYs' that may form part of the block of ten AYs'. Abatement would be triggered by the formation of that opinion rather than the other way around. This, in light of the discernibly distinguishable statutory regime underlying Sections 153A and 153C as explained above. While in the case of the former, a noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the basis of a requisition made would justify abatement of only those pending assessments or reopening of such concluded assessments to which alone it relates or is likely to have a bearing on the estimation of income. The mere existence of a power to assess or reassess the six AYs' immediately preceding the AY corresponding to the year of search or the "relevant assessment year" would not justify a sweeping or indiscriminate invocation of Section 153C. 68. The jurisdictional AO would have to firstly be satisfied that the material received is likely to have a bearing on or impact the total income of years or years which may form part of the block of six or ten AYs' and thereafter proceed to place the assessee on notice under Section 153C. The power to undertake such an assessment would stand confined to those years to which the material may relate or is likely to influence. Absent any material that may either cast a doubt on the estimation of total income for a particular year or years, the AO would not be justified in invoking its powers conferred by Section 153C. It would only be consequent to such satisfaction being reached that a notice would be liable to be issued and thus ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
