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TMI Blog2025 (2) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... on the determination of the total income of such other person for the six AY period or the relevant assessment years. In terms of the procedure as prescribed under Section 153C, the AO of the searched entity, on being satisfied that the books or articles discovered in the course of the search belong or pertain to a person other than one referred to in Section 153A, would transmit the same to the jurisdictional AO of the non-searched entity. That jurisdictional AO is thereafter obliged to form an opinion whether the books of account, documents or assets seized are likely to have a bearing on the determination of the total income of such other person. The entire edifice of Section 153C is built on incriminating material that may be gathered in the course of a search. The submission that action under Section 153C must be premised upon some connection between the searched and the non-searched entity or for that matter on the material gathered having some link with the searched person is clearly misconceived. If the material that had been gathered were to have a link or connect to the searched persons, it would clearly not fall within the scope of Section 153C at all. This, since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itary ground of challenge to the initiation of action under Section 153C proceeds on the premise that the material gathered had no correlation or connection with the individuals who were subjected to the search. They would thus contend that in the absence of the evidence gathered being pertinent or relevant to the persons named in the search authorization, the commencement of action under Section 153C against the writ petitioners would not sustain. 3. For the purposes of appreciating the challenge which stands raised, we deem it apposite to take note of the following essential facts. 4. On 28 December 2020, a search action is stated to have been undertaken by the respondents. In terms of the warrant of authorization, we find that the same was drawn in the names of Mr. Ajay Jain, Mr. Saurabh Jain, Mr. Mahesh Goyal, Mr. Manoj Sehgal and Mr. Fakir Chand. The petitioners seek to lay stress on the panchnama of the said proceedings being confined to the searched persons, namely, Mr. Ajay Jain, Mr. Saurabh Jain, Mr. Mahesh Goyal, Mr. Manoj Sehgal and Mr. Fakir Chand. 5. During the course of that search operation, premises numbered as ND-8, Pitampura, Delhi was also included. These were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l was again recorded on 17-06-21 wherein he was again failed to offer any explanation to the source of the cash seized during the course of the search action. 4. Further, during the course of Search & Seizure action at the premises situated at ND-8, Pitampura, Delhi - 110034, jewellery valued at Rs. 1,22,44,522/- was found and during the operation of lockers jewellery valued at Rs. 57,90,589/- was found from the lockers. In all, total jewellery amounting to Rs. 1,80,35,111/- was found in the possession of the assesses and his family members viz his wife, his two sons and two daughters-in-law, his unmarried daughter, his mother, his grandson and two granddaughters. As per the calculation made in accordance with directions of the CBDT dated 1st December 2016, jewellery of 254.69 grams with a value of Rs. 12,33,576/- was found to be in excess of the threshold provided for release by the Board. The assessee was given an opportunity to explain the source of the remaining jewellery during the course of the search on 30.12.2020. 4.1 The assessee was given another opportunity to explain the source of jewellery amounting to Rs. 1,80,35,111/- during the course of the lifting of restraint ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted in order to arrive at party wise quant um of transactions. 5.4 Further, certain mobiles phones belonging to family members as well as staff working a t the premises of the Shiv Prakash Bansal had also been cloned as digital evidences. A mobile named 'Huawei Y7 prime' was seized from one Amber Madan and the cloned data was annexurised as A13. Amber Madan is an employee of Shiv Prakash Bansal who maintains record in the excel workbook 'SKY' as per the direction of Shiv Prakash Bansal. It was found from the data of the said phone that there was a whatsapp group named 'Office' with members Ankur Bansal, DG, Manoj and Amber Madan. Ankur Bansal is the son of Shiv Prakash Bansal. DG and Manoj are the employees of Shiv Prakash Bansal as admitted by him in his statement dated 30-06-2021. In the group, transactions recorded in SKY worksheet have been discussed. Sample screenshot of the transactions is presented below. 5.5 The details in the whatsapp chat as shown in the above screenshot was tallied with the contents of the sheet SKY for the same date. It was found that the same transactions were entered in the work sheet as shown below - 5.6 It was thus esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The main purpose to maintain this record is to keep de tails of cash balance and not the detail sellers and buyers which is of no significance for me. 5.8 Since no evidence of any trading in agricultural commodities was found either during the course of the search action or on perusal of the seized record, he was asked to provide evidences such as receipt of buying and selling, in support of his claim that the transactions pertained to his business activity of trading in agricultural commodities. However, he could not provide a single piece of evidence to back his claim of business in agro commodities. Excerpt of his statement arc presented below: Q. 24 Please provide the proof of carrying out the trade of Agricultural Commodities? Ans. I usually trade in Agricultural Commodities outside the Agricultural Mandi which is mostly carried out in cash. As such, there is no record available regarding this trade of Agricultural Commodities. Q. 25 Don't you provide receipts or ask for receipts, as the case may be, for all the buying and selling of Agricultural commodities that takes place as part of your trade? Ans. As per our trade practice, we do not hold any stock. As per pract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earch & Seizure Action conducted at your premise, ND-8, Pitamputa, Delhi-34 on 28-12-2020, not a single piece of document was found pertaining to your said business of Agricultural Commodities. How can you claim that you have been carrying this trading of Agricultural Commodities from this premises? Ans. As explained earlier that in our trade practice, we note down details of every transaction on rough Notepad on daily basis and once the business is finished for the day, these said details are destroyed after a day or two. Therefore, for this reason only, no document was found during the Search & Seizure action. 5.9 Shiv Prakash Bansal was made aware of the fact that total inflow and outflow of funds of his operation as per the records maintained in 'SKY' worksheet amounts to Rs. 265,19,72,535/- and Rs. 206,84,58,730/-. He was also confronted of the fact that how he did not know a single person's address despite having crores of transactions with them and their contacts having been stored in the mobile of his son Ankur Bansal. In his reply he stated that his modus of business does not require him to know about his clients. He further refused to agree with the figure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m ankurkapoor". On referring to the entries made in the Worksheet "SKY" on 26.12.2020 "(table produced below), it is seen that the entry in the 10th row (highlighted) shows "Ankur Kapoor" in the FROM/TO column and 532500 in the RCVD col umn. Please explain the relation between this message in the whatsapp group "office" and the corresponding entry made in the worksheet 'SKY'. Ans. As stated earlier by me, the table containing the entries made on 26.12.2020 in the Worksheet "SKY" pertain to my business of Agricultural Commodities. The entry made in Row No. 10 seems to correspond to sale of Agricultural Commodities worth Rs. 5,32,500 to one Ankur Kapoor who must be one of my customers. 5.11 As can be seen above assessee was asked about the message '5.325 rcvd from Ankur Kapoor' and corresponding entry in worksheet "SKY". Further he was asked to provide details of Ankur Kapoor. In reply the assessee stated that he destroyed the rough records of transactions with clients after a day or two of the transaction taking place. He was further asked that despite recording each transaction against the name of the clients and having conversation regarding the same in a designated Whatsapp g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submission, the assessee Sh. Shiv Prakash Bansal has declared a profit of Rs. 27,21,980/- out of his claimed business of Agro trading. The assessee has also declared that the percentage of profit earned by him on facilitating these transactions of sale and purchase is .25 to .30%. However, the claim of the assessee was not found tenable since, he has not been able to provide evidences in support of the same despite having been provided adequate opportunities. The only fact which is certain is that cash is received and paid as recorded in the excel sheet SKY.2 5.14 The Assessee has not been able to provide a single piece of document regarding his business in agro commodities, has not been able to identify the clients and besides also could not provide adequate explanation for the difference in the closing balance for a day and opening balance in the next day. Looking at these scenarios it appears that Assessee has presented a cooked-up story of agro trading to mislead the department. Therefore, it can be depicted that the assessee is engaged in the activity of movement of cash. The same is in line with the earlier information available with the Department based on which the searc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orded in BANK excel sheet has also been found in Ambar Madan's Whatsapp conversation. Amber Madan is a trusted employee of Shiv Prakash Bansal who helps him in his operations. During the search operation, two phones were seized which belongs to Amber Madan. One of the phones was Huawei Y7 prime marked as Annexure A13. In that phone Amber Madan was a member of a Whatsapp group called 'office bank'. In this group membe rs (Amber Mada n, Ankur Bansal, Manoj, DG) have conversation regarding transactions done through Amit and KG Cool Enterprises bank accounts. Screenshots of Whatsapp conversation corroborating transactions done through bank and registered in BANK excel sheet are presented below: 5.19 Above are two messages posted by one Manoj ji in whatsapp group 'office bank'. The same transactions can be found in Bank excel sheet. Screenshot is presented below: 5.20 Summons was sent to various parties (out of the parties identified) who have transacted significantly with the bank accounts Amit industries and KG Cool enterprises. However, most of the summons were unserved with the remark that the addresses did not exist. However, replies were received from Wunde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m he has traded in crypto currency. However, he could not provide the details of a single customer/client since the details were maintained by his employee who was handling the wallets and the bank accounts for him, and who has fled the place. Excerpt of his statements are presented below: Q.67 You are now being shown the clones data displaying entire worksheet named "BANK" of the Excel Workbook named "SKY.xlsx" stored in the Pen Drive mentioned in the Q. No. 17 of this statement. Please specify who has made these entries in the Worksheet "BANK" and what do all the entries made in different columns of the worksheet "BANK" denote alongwith its significance? Ans. Yes, I acknowledge that I have gone through the ent ire worksheet "BANK" of the excel workbook named "SKY.xlsx". Sometimes, I have made these entries and sometimes, these entries have been made by Amber Madan on my directions. These entries correspond to the transactions related to my business of Crypto Trading carried out on different dates on behalf of my clients. The entries in the RCVD column correspo nd to realization of funds from Crypto Trading and entries in the PAID column correspond to repayment of funds to cli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ypto-trading on behalf of my clients. I do not ow n any Cryptocurrency pertaining to the transactions entered in worksheet named "BANK" of the Workbook named "SKY.xlsx". I have earned only commission income during such Crypto transaction on be half of my clients. I study crypto market regularly to know the appropriate time of buying & selling of Crypto Currency so that I can maximize the profits of my clients. However, the technicalities and intricacies of Crypto business is not known to me. In the part of technicality, I am assisted by my employees Dinesh alias DG and Manoj. DG and Manoj are the custodian of 2 bank accounts named Amit Industries and KG Cool Enterprises through which realization of proceeds from sale of Crypto Currencies are done. DG and Manoj manage all the Crypto wallets and the fund flow. In this entire business, my job is limited to enabling a pool of funds by aggregating money from investors/clients, direct DG and Manoj to invest the funds in Cryptocurrencies at appropriate time and direct him to sell the Cryptocurrencies at appropriate time. After the sale of Cryptocurrencies, the realized amount is transferred to respective clients as proportional to their i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Do you wish to stand by your answer to the previous question that you don't have any information about the Crypto Wallets being used by you and your team for trading in Crypto Currencies? Ans. Yes, I understand and I stand by my previous answer that I don't have any information about the Crypto Wallets being used for trading in Crypto Currencies on behalf of my clients. Q. 77 Please provide the details of all the persons/entities mentioned in the column "FROM" of the table shown to you as part of Q. No. 42, including their full name, Address, Name of their business concern, Contact No. etc.? Ans. As stated earlier, these are the persons/entities through which the realization of funds from Crypto Trading has been done. "WUNDERBAKE" and "PROSPERITA" are such payment facilitators through which funds invested in Cryptocurrencies are realized. The regd. Q. 78 Please provide details of all the persons/entities mentioned in the column "FROM/TO" of the table shown to you as part of Q. No. 42, including their full name, Address, Name of their business concern, Contact No. etc.? Ans. As stated earlier, these are the persons/entities to whom repayment of funds invested in Cryptoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng balance of the Worksheet 'DJ' Rs. 62,00,955/- is the surplus in the hands of the assessee and is to be treated as the income of the Assessee, Sh. Shiv Prakash Bansal. The taxability in this regard will be examined as per the provisions of the law. 5.26 Another Excel sheet named 'AB' was also found in the same workbook. In the excel sheet' AB' record of different amounts having been received from Entities/ persons such as 'PRASHAN T', 'DJ' etc. and record of different amounts having been paid to entities/ persons such as 'SUSHIL JAIN', 'ANKUR JI', etc. has been maintained. One Screenshot of the entire Excel Sheet' AB' is presented below for illustration: 5.27 Since no details were provided by the assessee during the course of the search, and even during the Pos t-Search enquiries assessee could not provide any evidence to prove otherwise, this worksheet has to be interpreted simply by assuming a ll the 'RCVD' entries to be receipt and all the 'PAID' entries to be payment. This is the only de tail that is recorded in the relevant excel sheet. So, the total receipt is Rs.1,67,07,860/- and the total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (HARISH KUMAR TAN WAR) Deputy Commissioner of Income Tax Central Circe - 14, New Delhi" 7. As is manifest from a reading of that Satisfaction Note, the material unearthed in the course of the search of the Pitampura premises is stated to have resulted in the unearthing of evidence pertaining to huge cash transactions as well as an organized system for handling of unaccounted cash. The respondents in the course of the search of those premises are also stated to have seized jewellery as well as electronic devices from which data is stated to have been extracted. They are also stated to have accessed the WhatsApp conversations between Mr. Shiv Prakash Bansal and the searched persons. On the basis of the above, the AO came to the conclusion that the digital evidence obtained in the course of that search pertained or related to Mr. Shiv Prakash Bansal and thus the same likely to have a bearing on the determination of income of that individual. Accordingly, the AO proceeded to draw proceedings referable to Section 153C for AY 2015-16 to AY 2021-22. Similar satisfaction notes were drawn up in respect of the other writ petitioners before us. 8. The petitioners, as noted above, had assa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e provisions may well be seen as violative of the fundamental rights enshrined in Articles 14 and 19. xxxx xxxx xxxx 16. Mr. Vikas Singh, learned Senior Counsel for the Revenue has also referred to Section 153C of the Act, which essentially prescribes the period within which the action envisaged in that Act is to be completed, and the method by which it is to be computed. Section 153 prescribes the period within which assessments or reassessments must be completed, viz. in the normal course within two years from the end of the Assessment Year in which the income was assessable. If income appears to have escaped taxation and Sections 147 to 149 are pressed into service, Section 153 (2) mandates broadly that the assessment must be completed within one year. Sections 153A, 153B and 153C were introduced by the Finance Act, 2003 with effect from 1.6.2003. In essence, Section 153A has in focus the 'case of a person where a Search is initiated or any assets are requisitioned' and envisages the furnishing of a Return of income for six years. The succeeding Section 153B sets a limit of two years for the making of an order of assessment or reassessment of such a person, that is, one in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an authority for the proposition that the phrase 'other person' wherever occurring, must be construed as referring to a person who had dealings or transactions with the party who had been subjected to search. It is in the aforesaid context that Mr. Sinha sought to rely upon the observations of the Court appearing in the passages extracted above. 11. We, however, find ourselves unable to countenance that submission bearing in mind the indisputable position which would emerge upon a conjoint reading of Section 153A along with Section 153C. Those provisions as they existed at the relevant time are reproduced hereinbelow: - "153A- Assessment in case of search or requisition: [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003 [but on or before the 31st day of March, 2021], the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1.-For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2.-For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loa ns and advances, depos its in bank account.] [(2) If any proceeding initiated or any order of assessment or reassessment made under sub-section (1) has been annulled in appeal or any other legal proceeding, then, notwithstanding anything contained in sub-section (1) or section 153, the assessment or reassessment relating to any assessment year which has abated under the second proviso to sub-section (1), shall stand revived with effect from the date of receipt of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made [and for the relevant assessment year or years as referred to in sub-section (1) of section 153A] except in cases where any assessment or reassessment has abated.] [(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (a) no return of income has been furnished by such other person and no not ice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred to in Section 153A and such person being the non-searched entity. All assessments pending on the date of commencement of action under that provision stand abated and the AO thus becomes empowered to commence assessment afresh. 15. The trigger for Section 153C is thus the discovery of documents or articles in the course of a search which pertain or belong to a third party, and which may have a bearing on the determination of the total income of such other person for the six AY period or the relevant assessment years. 16. It becomes pertinent to note that the search in the present case was undertaken between 28 December 2020 and 31 December 2020. The search would thus, undoubtedly, be governed by Section 153C as it stood post the amendments introduced in that provision by virtue of Finance Act, 2015 and which added the expression "pertains, or pertain to", in addition to the phrase "belongs to" which always existed. However, nothing material would turn upon that amendment and which has been explained by the Supreme Court in Income Tax Officer v. Vikram Sujitkumar Bhatia (2024) 7 SCC 741 as being clarificatory and thus being applicable to searches which may have been undert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under that provision is itself predicated upon the material gathered in the course of the search belonging or pertaining to an unrelated party and one who may not have been covered under the search authorization. 21. We are therefore of the firm opinion that the statutory scheme does not mandate or envisage the discovery of a connect or interrelationship between the searched and the non-searched entity. 22. The reliance placed by Mr. Sinha on the judgment of the Bombay High Court in - Commissioner of Income Tax v. Arpit Land Pvt. Ltd 2017 SCC OnLine Bom 5640 is also clearly misplaced. In Arpit Land, the Bombay High Court had observed as follows:- "6. We note that in terms of Section 153C of the Act at the relevant time i.e. prior to 1st June, 2015 the proceedings under Section 153C of the Act could only be initiated/proceeded against a party - assessee if the document seized during the search and seizure proceedings of another person belonged to the party - assessee concerned. The impugned order records a finding of fact that the seized documents which formed the basis of initiation of proceedings against the respondent assessees do not belong to it. This finding of fact ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s unable to appreciate how the aforenoted observations could be of any assistance to the cause as espoused by the writ petitioners. The Bombay High Court took the view that Section 153C cannot be commenced merely on the basis of suspicion and that the sine qua non for the initiation of proceedings is of the seized documents belonging to the non-searched entity. 24. While, we are in the present case not really concerned with the distinction which various judgments recognized between the expressions "belong to" and "pertain to", suffice it to note that the 2015 amendments were clearly found by the Supreme Court itself as being clarificatory in character and thus being applicable to even those searches which may have been undertaken prior to the promulgation of Finance Act, 2015. This position stands duly elucidated in the judgment of the Supreme Court in Vikram Sujitkumar Bhatia. 25. We are thus of the firm opinion that an action under Section 153C is premised solely on the discovery of incriminating material and which is likely to have an impact or bearing on the assessed income of a non-searched entity. The statute neither requires nor obliges the AO of the other person to find o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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