9911796707
TMI Blog2024 (10) TMI 1628X X X X Extracts X X X X X X X X Extracts X X X X ..... o noted that a notice u/s 153C r/w Section 153A was issued. In response thereto the assessee had filed his return of income. Thereafter, the AO assessed income u/s 143(3) of the Act. AO has also recorded that the assessment is made u/s 143(3) of the Income Tax Act. Thus, the assessment order is contrary to law and deserves to be quashed. Moreover, the AO could have rectified the order, if it was a clerical mistake. He did not do so. Be as it may, at this stage before us it is the order stated to have been passed u/s 143(3) of the Act, which is patently illegal. Estimation of income - bogus purchases - AO rejecting the books of account maintained by the assessee u/s 145(3) made the impugned addition - stand of assessee is that all details in the form of books of accounts, copy invoices, GR, bilties etc. were filed before the Assessing Officer and the AO without pointing out any specific defect therein rejected the books of account u/s 145(3) and made the impugned addition applying the GP rate of 0.24% on the total turnover - HELD THAT:- We fail to understand the reasoning of AO as at one hand he stated sale/purchase claimed to have been made by M/s Kamal Trading Company as bogus the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the addition made by the AO is not emanating from any incriminating material found during the course of search. 7. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the proceedings initiated under Section 153C is bad and the consequent assessment order is liable to be quashed in the absence of any satisfaction being recorded by the AO on the searched person that the incriminating material belonging to the assessee was found during the course of the search. 8. (1) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in confirming the addition of Rs. 6,07,392/- made by the AO treating the sales/ purchases made by the assessee as not genuine. (ii) That the above addition has been confirmed despite the same has been made on estimated basis by arbitrarily rejecting the explanations and the evidences brought on record by the assessee. (iii) Without prejudice to the above, the CIT(A) has erred in rejecting the contention of the assessee that profit on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) has erred in rejecting the contention of the assessee that profit on the sale transaction has already been declared by the assessee, and thus, the addition made by the AO will lead to double taxation of income in the hands of the assessee. 3. (1) On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the books of accounts of the assessee have been rejected by the AO without pointing out any defect specified under section 145(3) of the Act. (ii) That the CIT(A) has erred in rejecting the contention of the assessee that the addition has been made by the AO despite the assessee has been maintaining regular books of accounts and financial statement are audited as per law and nothing adverse has been pointed out by the AO. 4. On the facts and circumstances of the case, the learned CIT(A) has erred both on facts and in law in rejecting the contention of the assessee that the addition has been made by AO relying upon the statement recorded of third party without providing the opportunity of cross examination to the assessee to rebut the same. 5. On the facts and circumstances of the case, the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rch conducted on Sunstar Group of cases on 19.12.2013. Notice u/s 153C was issued to the assessee on 20.01.2016 i.e. in AY 2016-17. Therefore, the period of six years for the purposes of Section 153 related to A.Y. 2010-11 to 2015-16. The assessment year under consideration being AY 2008-09 is beyond the period of six years referred to in Section 153C and thus outside the scope of Section 153C of the Act. Thus the AO had no jurisdiction to make an assessment of the assessee's income for the year under consideration. In support of his contention, learned counsel also relied on following decisions of the Tribunal: - M/s Marconi Infratech (P) Ltd. v. ACIT 2024 (7) TMI 129 dated 21.06.2024; - ACIT Central Circle-1, Gurgaon V. Enpro Telecom Pvt. Ltd., Delhi (Vice Varsa), 2024 (2) TMI 543, dated: 8-2-2024 - DCIT Central Circle -20 New Delhi Versus Rajesh Vashisht, 2023 (12) TMI 294 Dated: 29-11-2023 - DCIT Central Circle -20 New Delhi Versus Rajesh Vashisht, 2023 (12) TMI 294 Dated: 29-11-2023 - M/S Esha Securities Pvt Ltd. V. The Dy. C.I.T. Central Circle - 13 New Delhi and (Vice-Versa), 2024 (7) TMI 638, Dated: 30-5-2024 5.1 In support of his contention learned counsel has also fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Having regard to the aforesaid facts, since admittedly, the satisfaction was recorded by the Learned AO of the assessee on 31.10.2018, falls in the Assessment year 2018-19, the immediately preceding 6 Assessment Years would be the Assessment Years from 2013-14 to 2018-2019. Therefore, the notice under Section 153C of the Act could not have been issued for A. Ys. 2011-12 and 2012-13 as rightly pointed out by Learned Counsel appearing for the assessee. Thus, taking into consideration the entire aspect of the matter and further having regard to the amendment under 2017 Act w.e.f 01.04.2017 with prospective effect as clarified by CBDT Circular No. 2/2018 dated 15.02.2018, as the recording of satisfaction was made by the Learned AO of the assessee only on 30.10.2018, the issuance of notice under Section 1530 of the Act for A. Ys. 2011-12 2012-13 since had not fall in the previous 6 years, the assumption of jurisdiction in reopening of assessment under Section 153C of the Act for A. Ys, 2011-12 and 2012-13, therefore, found to be not maintainable. The same is void ab initio and thus, quashed. 15. In the result, the assessee's appeals for A. Ys. 2011-12 and 2012-13 are allowed ITAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oks of account/materials/asset belonging/pertaining to non-searched person, by the jurisdictional AO of the non-searched person. In other words, date of recording of the satisfaction in the case of the searched person qua the non-searched person becomes date of search in the case of non-searched person [the assessee in the present case] in the instant case of the assessee (non-searched person), the date of search would become the date of recording satisfaction i.e., 23.11.2010. The impugned A. Y 2004-05 would therefore fall beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction by the assessing officer of the searched person. In light of the decision of the Hon'ble Supreme Court and Delhi High Court [supra], therefore, we have no hesitation in quashing the impugned assessment order being made without jurisdiction. 17. Since we have quashed the assessment order, we do not find it necessary to dwell into the merits of the case. 10. Similar Reliance is placed on following judgements: ITAT Delhi Judgement in the case of JASJIT SINGH VERSUS ACIT, CENTRAL CIRCLE-11, NEW DELHI AND VICE-VERSA, 2014 (11) TMI 1012-ITAT DELHI, dated: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the search conducted on the premises on M/s Sunstar Group, certain documents were seized (page 82, 84 and 85 of A-21) and on the basis of such documents the Id. AO has resorted to the provisions of Section 153C of the Act to make the assessment. The documents seized during search and considered to be incriminating material by the Id. AO for making assessment are merely dumb documents and by any means cannot be correlated to the assessee. 15. On the basis of the seized material, the Ld. AO made various allegations ie, the payment of salary, office rent, and Audit fee of the assessee is being approved by the Vice President and CFO of M/s Sunstar overseas. No clarity and no explanation provided by AO as to how the information printed on some loose sheets be taken as legit evidence against the assessee. Merely, from bare perusal of the loose sheet, it cannot be concluded that the assessee is bogus entity. Also, it settled principle of law that loose sheets or statements recorded without any conclusive evidence will not be considered as incriminating material 16. It is a well settled law that in the absence of incriminating material, no addition would be made u/s 153C of the Act. Relian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ees and years mentioned is FY 2009-10, 2010-11 and 2011-12, there is no clarity whether the documents refer to the financial years or the assessment years. Therefore, the conclusions drawn are vague and contrary in Nature Secondly, upon perusal of the seized documents (page No. 82 and 85 of Annexure 21), it can be observed documents pertain to October, 2013 and November, 2013, i.e. FY 2013-14 and have details of salary and office rent and bonus. The AY mentioned in these documents is belong only to FY 2013-14 and therefore, no adverse inference can be drawn in other AYs. 20. Further, the seized documents cannot be considered as incriminating, as nothing was stated in the said documents which can lead to the conclusion that assessee has some unaccounted/ undisclosed income. 21. Therefore, in view of above, the actions AO were based merely only on surmises and conjectures as no adverse material has been brought on record by the AO to form a belief that the transactions of the assessee are bogus. Hence, the additions made by AO are without any basis and just based on mere surmises and conjectures and on preconceived notions without applying his mind AO has rejected books of accounts u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... already recorded all the transactions without concealing any income and has duly paid taxes on the receipts during the relevant year. The actions of the AO are entirely vague and erroneous, as the addition was made mechanically by applying a GP rate to the total turnover without any substantiated basis. It is to be noted that, the AO did not question the GP rate declared by the assessee as the same is evident from the fact that GP rate declared by the assessee was accepted by the AO. 27. Without prejudice to above, even if the Id. AO sought to tax the gross profits in the hands of assessee, he should have given credit to the gross profits already declared by the assessee. Meaning thereby, the amount to be added in the hands of assessee should have been Gross Profits computed by the AO less Gross Profits accounted for in books of accounts. It is be noted that an amount can be brought to tax in the hands of assessee only once and subjecting the same amount to tax again would be detrimental to the interest of assessee. 28. Therefore, in view of the above, the addition made by AO is bad in law and liable to quashed. Without prejudice to the above, the AO has erred in calculating the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunity of cross- examination to the assessee amounts to gross violation of the principles of natural justice and the same will render the order passed null and void. The relevant paragraph of the said decision is extracted herein below: - 6. According to us, not allowing the assessee to cross-examine the witnesses by the adjudicating authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the adjudicating authority he has specifically mentioned that such ari opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the adjudicating authority. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessees discharging the burden placed on them to explain the credit appearing in the books of accounts, the Court is satisfied that even on this aspect the impugned order of the ITAT suffers from no legal infirmity warranting interference. 36. The above judgement has been affirmed by Hon'ble Supreme Court in the case of PCIT-2 Delhi V. M/S Best Infrastructure (India) Pvt. Ltd., 2018 (6) TMI 971, dated: -14-5-2018 37. Delhi High Court in the case of PCIT (Central) -2 V. M/S. JPM Tools Ltd., M/S Jay Fecylinder Ltd., M/S. Jay Iron and Steel Ltd., M/S. Jay Auto Components Ltd. M/S. Jay Ace technologies Ltd., 2022 (9) TMI 1330, dated:26-9-2022 13. In any event, in the present cases, as the Respondents-Assessee's were denied the opportunity to cross-examine Mr. Rajesh Agarwal, despite a specific request, this Court is in agreement with the ITAT that his statement needs to be excluded and cannot be relied upon as a piece of evidence to make any addition. In fact, the Supreme Court in the case of M/s Andaman Timber Industries vs. CCE (SC), 127DTR 241 has held ...not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngaging in surmises and conjectures and solely relying upon some dumb documents is liable to be deleted. 5.2 On the other hand learned DR supported the orders of authorities below. He, however, could not controvert the factual position that for the assessment year under consideration i.e. A.Y. 2008-09, the notice u/s 153C was issued on 20.01.2016 which related to A.Y. AY 2010-11 to AY 2015-16. 5.3 We have heard rival submissions and perused the material available on record including the case laws relied upon by the learned counsel for the assessee. There is no dispute that in assessee s case for A.Y. 2008-09 notice u/s 153C was issued on 20.01.2016, therefore the assessment year 2008-09 is beyond the period of six assessment years. We find that coordinate Benches of the Tribunal have decided identical issue in favour of the assessee. Therefore, following binding precedent, we hold that the assessment made for A.Y. 2008-09 is barred by limitation, therefore, the same is hereby quashed. Ground is allowed. 6. Since for A.Y. 2008-09 we have quashed the assessment itself being barred by limitation the other grounds raised by the assessee have become of academic interest only and we refr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment for AY 2014-15 has been wrongly framed under section 143(3) of the Act by ignoring the mandatory provision of section 153C of the Act. Hence, the same is not sustainable in the eyes of the law on account of jurisdictional error and therefore liable to be quashed. 9. Reliance is placed on the following judicial pronouncements in this regard wherein it has been held that if any assessment year falling within the period of six years immediately preceding the assessment year relevant for the previous year in which search was conducted for initiating proceeding u/s 153C of the Act, then the assessment ought to have been made under section 153C by issuing notice u/s 153C of the Act and not u/s 143(2) of the Act. 10. ITAT Delhi in the case of RAJA VARSHNEY v. DCIT, CENTRAL CIRCLE-31, New Delhi, ITA No. 1459/Del/2024, dated: 26.09.2024, wherein Tribunal has quashed the Assessment Order holding that assessment for AY 2021- 22 has been wrongly framed under section 143(3) of the Act by ignoring the mandatory provision of section 153C of the Act. Relevant extract is being reproduced below as under. - 13. From the above discussion the date of recording of the satisfaction will be t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, dated 30.06.2022 and the consequent assessment order dated 29.12.2022 passed u/s 143(3) of the Act are hereby quashed. The additional grounds filed by the assessee are allowed. 12. ITAT Delhi in the case of DCIT, CENTRAL CIRCLE-19, DELHI v. BENNETT WILLIAMSON ENGINEERS LTD. DELHI, 2024 (5) TMI 905, dated: 02.01.2024. Relevant extract is being reproduced below: - 9. Thus, ongoing through the judgments of Hon'ble jurisdictional High Court and Hon'ble Apex Court, we have no hesitation to hold that the Assessments made for A.Y. 2012-13 u/s 144 r.w.s. 142(1), consequent to the satisfaction note recorded on 18 11 2013 ( . . 2014-15), ought to have been made u/s 153C of the Income Tax Act, 1961. Since, the provisions of Section 153C have not been invoked and since, the proceedings u/s 153C have not been initiated, the assessment made u/s 144 r.w.s. 142(1) is treated as void ab initio. 13. ITAT Mumbai in the case of DIWAKAR N. SHETTY v. DY. CIT, CENTRAL CIRC LE-6 (1), MUMBAI, 2020 (11) TMI 560, Dated: 30-9-2020, Relevant extract is being reproduced below: - 11. The Assessing Officer in the impugned assessment year has made assessment under regular provisions. Since, the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order for assessment year 200809 is therefore, unsustainable in the eyes of law. Accordingly, we are left with no option but to quash the assessment for assessment year 2008-09 also. 15. ITAT Delhi in the case of SHRI JAGJIT SINGH v. ACIT, CENTRAL CIRCLE 21, NEW DELHI, 2019 (10) TMI 350- ITAT DELHI, dated: 01.10.2019, Relevant extract is being reproduced below. 25. In view of what has been discussed above, we are of the considered view that assessment framed by the assessee u/s 153A r/w section 153C for AYs 2009-10, 2010-11 and 2011-12 is bad in law for want of jurisdictional error with the AO. At the same time, assessment framed u/s 143 (3) for AY 2012-13 is also bad in law because date of handing over the seized document is 20.01.2014 and the assessment in this case was required to be framed u/s 153C of the Act. Because Hon'ble jurisdictional High Court in case of CIT vs. RRJ Securities Ltd. (supra) has categorically held that, In terms of provisa to section 153C of the Act, a reference to the date of the search under the second proviso to section 153A of the Act has to be construed as the date of handing over of assets/documents belonging to the assessee (being the person ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch. 17. Further reliance is placed on the Hon'ble ITAT Delhi Judgement in the case of JASJIT SINGH VERSUS ACIT, CENTRAL CIRCLE-11, NEW DELHI AND VICE-VERSA, 2014 (11) TMI 1012-ITAT DELHI, Dated.- Novembe 5, 2014 18. The above-mentioned judgement of Hon'ble ITAT, Delhi was affirmed by the Hon'ble Delhi High Court in the cas COMMISSIONER OF INCOME TAX-14 VERSUS SHREE JASJIT SINGH, 2015 (8) TMI 982 - DELHI HIGH COURT, Dated. - August 11, 2015. 19. Furthermore, the above-mentioned Delhi High Court judgement was affirmed by the Hon'ble Supreme Court the case of COMMISSIONER OF INCOME TAX 14 VERSUS JASJIT SINGH, 2023 (10) TMI 572 - SUPREME COURT, Dated: September 26, 2023. 20. In view of the above-mentioned submissions and judicial pronouncements, the assessment framed under section 143(3) of the Act for AY 2014-15, which was otherwise required to be framed under section 153C of the Act is no sustainable in the eyes of law on account of jurisdictional error and therefore liable to be quashed. Addition of Rs. 12,86,416/- on account of undisclosed income treating the sales/ purchases made by assessee as not genuine. AO has rejected books of accounts u/s 145(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the transactions without concealing any income and has duly paid taxes on the receipts during the relevant year. The actions of the AO are entirely vague and erroneous, as the addition was made mechanically by applying a GP rate to the total turnover without any substantiated basis. It is to be noted that, the AO did not question the GP rate declared by the assessee as the same is evident from the fact that GP rate declared by the assessee was accepted by the AO 26. Without prejudice to above, even if the Id. AO sought to tax the gross profits in the hands of assessee, he should have given credit to the gross profits already declared by the assessee. Meaning thereby, the amount to be added in the hands of assessee should have been Gross Profits computed by the AO less Gross Profits accounted for in books of accounts. It is be noted that an amount can be brought to tax in the hands of assessee only once and subjecting the same amount to tax again would be detrimental to the interest of assessee. 27. Therefore, in view of the above, the addition made by AO is bad in law and liable to quashed. No addition can be made relying on the statements recorded on the back of the assessee wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the adjudicating authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the adjudicating authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the adjudicating authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex- factory prices remain static. It was not for the Tribunal to have guesswork as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) TMI 971, dated:-14-5-2018 34. Delhi High Court in the case of PCIT (Central) -2 V. M/S. JPM Tools Ltd., M/S Jay Fecylinder Ltd., M/S. Jay Iron and Steel Ltd., M/S. Jay Auto Components Ltd. M/S. Jay Acetechnologies Ltd., 2022 (9) TMI 1330, dated:26-9-2022 13. In any event, in the present cases, as the Respondents-Assessee's were denied the opportunity to cross-examine Mr. Rajesh Agarwal, despite a specific request, this Court is in agreement with the ITAT that his statement needs to be excluded and cannot be relied upon as a piece of evidence to make any addition, In fact, the Supreme Court in the case of M/s Andaman Timber Industries vs. CCE (SC), 127DTR 241 has held...not allowing the assessee to cross-examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. 14. Consequently, this Court is of the view that no substantial question of law arises for consideration in the present batch of appeals and accordingly, the same are dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue of framing of assessment u/s 143(3) of the Act. The learned CIT(Appeals) affirmed the order of the Assessing Officer passed u/s 143(3) of the Act on the basis that framing of assessment under a wrong provision of law is curable u/s 292BB of the Act. We are not inclined to accept this reasoning of the learned CIT(Appeals) as the proceedings u/s 143(3) and 153C of the Act operate in two different and distinct fields. The law is well settled that issue related to jurisdictional error cannot be cured u/s 292BB of the Act. In the case in hand the AO wrongly passed order u/s 143(3) of the Act while the initiation of the proceedings was by way of issuing notice u/s 153(2). It is also recorded by the Assessing Authority that the order of assessment was passed with the statutory approval of the Joint Commissioner of Income-tax in accordance with section 153D of the Act. It goes to demonstrate that the proceedings were related to section 153C of the Act. The coordinate Bench of this Tribunal in the case of Shri Jagjit Singh v. ACIT, Central Circle-21, New Delhi, 2019 (10) TMI 350 ITAT Delhi, dated 01.10.2019, following the judgment of the Hon ble Delhi High Court in the case of CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the assessee has concealed income or filed inaccurate particulars to the extent as discussed above and thereby liable to be initiated the penalty u/s 271 AAB of the Act. 9.3 In appeal the learned CIT(A) affirmed the addition made by the AO. Aggrieved against it, now the assessee is in appeal before this Tribunal. 9.4 Learned counsel for the assessee reiterated the submissions as made in the synopsis filed on behalf of the assessee and submitted that all relevant details in the form of books of accounts, copy invoices, GR, bilties etc. were filed before the Assessing Officer. The AO without detecting any defect in the books of accounts, rejected the same u/s 145(3) of the Act and made addition of Rs. 12,86,416/- by applying the GP rate of 0.24% (declared in its books of accounts) on the total turnover accounted by it in its books of accounts. Learned counsel submitted that the AO has made addition of Gross Profit which has already been considered by the assessee for computing its tax liability. He submitted that the AO by adding gross profit again to the income of the assessee has made double taxation which is unsustainable and unjust in the eyes of law. He submitted that th ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
