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TMI Blog2025 (4) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Income Tax (Appeals) ought to have cancelled the assessment u/s 153C of the Act that was made for an Assessment Year beyond the stipulated period of six assessment years as laid down under the applicable provisions of Section 153A/153C of the Act by appreciating that the date of recording satisfaction note in the case of the 'other person' by the Assessing Officer of the 'searched person' must be construed as the date of handing over of documents relating to the other person even where the Assessing Officer is one and the same for both the 'searched person' and the 'other person'. 11. For that the assessment made under section 143(3) r.w.s 153C of the Act is bad in law as the Learned Assessing Officer did not comply with the relevant provisions r. the fourth proviso to section 153A(1) of the Act applicable to the appellant for the relevant assessment year and has failed to record his satisfaction to the effect that the income represented in the form of asset has escaped assessment for the subject AY 2012-13 which is falling beyond the six Assessment Years and forming part of 'relevant assessment year' as per provisions of Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03.2022 after making addition/s on account of unexplained investment u/s 69 of the Act. 5. It is noted that the reasoning given by the AO for making the addition/s by way of unexplained investments were similar across both the AYs. Both the parties have also argued these appeals together. Hence, for the sake of convenience, and to avoid repetition of facts; we deem it fit to adjudicate each of the common issues across both AYs before us together. 6. The facts as noted by us are that, certain loose sheets were found and seized from the office premises of Jain Metal Group which was ID marked Annexure ANN/MS/JMG/LS/S-1. The AO is noted to have observed that these loose sheets contained the regular books & documents relating to the assessee. On the basis of these documents, the AO is noted to have drawn up Satisfaction Note dated 31-12-2021 wherein he observed that, he was satisfied that, the books and documents in his possession showed that Rs.63,25,34,760/- had escaped assessment in AY 2010-11 and that the same was represented in the form of 'asset' in AY 2010-11. The AO accordingly, issued notices u/s 153C of the Act for AYs 2010-11 to 2019-20. 7. In the AYs 2012-13 & 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, in the present case, the date of satisfaction note i.e. 31-12-2021 was to be deemed to be the date of search for computing both the period of six (6) assessment years and the extended ten (10) year block period. Explaining to us, the manner of identification of `relevant assessment year' for computing the ten (10) year block, the Ld. AR took us through Explanation (1) to Section 153A of the Act and the decisions of the Hon'ble Delhi High Court in the case of PCIT vs Ojjus Medicare (P) Ltd. (supra) and the Hon'ble Madras High Court in the case of A.R. Safiullah (WP(MD) No. 4327 of 2021) and, urged that, having regard to the deemed year of search [date of satisfaction note i.e. 31-12-2021 i.e. AY 2022-23], the block period of 10 AYs would be AYs 2022-23 to 2013-14. The Ld. AR accordingly contended that AY 2012-13 fell outside the net of `relevant assessment year' and thus the notice issued u/s 153C of the Act as well as the consequent order passed for AY 2012-13 deserves to be quashed. 9. The second challenge raised by the Ld. AR was to the usurpation of jurisdiction u/s 153C of the Act by the AO, without first satisfying the essential condition precedent in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44) and Hon'ble Delhi High Court in the case of CIT vs Kabul Chawla (380 ITR 573), which has since been affirmed by the Hon'ble Supreme Court in the case of PCIT vs Abhisar Buildwell Pvt. Ltd. (149 taxmann.com 399), urged that the additions made u/s 69 of the Act in relation to unexplained bank credits in the unabated AYs 2012-13 & 2013-14, in absence of incriminating material found in the course of search, deserves to be deleted. 12. Per contra, the Ld. CIT, DR, appearing for the Revenue, supported the action of the lower authorities. The Ld. CIT, DR relied upon Paras 7.10 & 7.11 of the order of the Ld. CIT(A) to counter the contention of the appellant that, the notice u/s 153C of the Act for AY 2012-13 was falling within the 10-year block period. He also contended that the AO had validly recorded his satisfaction note stating that income represented in form of asset had escaped assessment and therefore the notices issued u/s 153C of the Act for 'relevant assessment year' was in compliance with the condition precedent set out in fourth proviso to Section 153A of the Act. According to Ld. CIT, DR, the assessee did not dispute the fact that the seized material conta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Y.2011-12, the print outs of the same are seized vide Annexure-ANN/RR/JMG/LS/S-4, dated 25/02/2020, wherein an amount of Rs.63,25,34,760/- was found received as Share premium and the same was utilised for the purchase of shares during the F.Y 2009-10 . On verification of the seized material seized vide Annexure ANN/MS/JMG/LS/S1 from the Corporate Office of Jain Metal Group, it is found that the company has no operation during the FY 2009-10. However, has issued the 648934 shares and raised a share premium of Rs.63,25,34,760 without any substantial activity. Further on verification of the seized material seized vide Annexure ANN/MS/JMG/LS/S1 from the Corporate Office of Jain Metal Group it is seen that during the FY 2010-11, FY 11-12 ad FY 12-13 the assessee company has sold the unquoted equity shares. However, the assessee has not shown any income from the sale of the unquoted equity shares in the Profit and Loss Account of the respective Assessment Years. As on 31/03/2012, M/s Chin Purni Traders Private Limited had issued 648724 shares to M/s. Jackpot Commodeal Pvt Ltd and M/s. Salputri Dealers Pvt Ltd and the share holding pattern is as under: Sl. No. Entity No. of shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 020 which is the relevant date for ascertaining the six assessment years and also the 'relevant assessment year' which could have been reopened by the AO. It is noted that, the coordinate Bench at Chennai in the case of Shri Bondalapati Shivaji Rao Vs DCIT in ITA No.1044/Chny/2023 has examined this particular issue in detail and, following the decision of Hon'ble Delhi High Court in the case of Pr.CIT Vs Ojjus Medicare (P) Ltd (supra), which was rendered after considering the amendment by Finance Act, 2017, this Tribunal held that, the first proviso to Section 153C of the Act shifts the relevant date from date of initiation of search, to the date of hand-over of books of seized material to the AO of the non-searched person (or in its absence to the date of satisfaction note) and the said date shall be commencement point for reckoning the six AYs'. The relevant findings are noted to be as follows :- 12. Reading of the main provision of Section 153C (as it stood during the year) along with the first proviso reveals that, the reference point which is spoken of, in section 153A(1) from which the period of six AYs' is to be calculated, and which stipulates it to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in our view, would be contrary to the scheme of Section 153C(1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized assets/documents on search of the Assessee; the seized assets/documents belonging to a person other than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. We, therefore, accept the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004-05 were outside the scope of Section 153C of the Act and the AO had no jurisdiction to make an assessment of the Assessee's income for that year." 13. It is noted that the Hon'ble Supreme Court in Jasjit Singh (supra) has affirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he six year period was to be reckoned, in respect of which the returns were to be filed by the third party(whose premises are not searched and in respect of whom the specific provision under section 153-C was enacted. The revenue argued that the proviso [to section 153(c)(1)] is confined in its application to the question of abatement. 10. This Court is of the opinion that the revenue's argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials - of the search party, under section 132 - would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually "relate back" as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under section 153-C after a period of four years, the third party assessee's prejudice is writ large as it would have to v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uivocally accepted the point of commencement for the purposes of identifying the six or the "relevant assessment year" to be etched from the date of handover of documents, assets or things to the AO of the non-searched party. 16. Before us, the Revenue has urged that, subsequent to the amendment by Finance Act, 2017, the first proviso to Section 153C(1) is only relevant for the purposes of abatement of pending assessment or reassessment proceedings, which is mentioned in Section 153A(1) of the Act and that it cannot be viewed as the reference point from which the block of six AYs is to be computed. According to Ld. CIT DR therefore, the decisions cited by the assessee were of no relevance, post this amendment. We however are unable to countenance this argument of the Revenue as there is no such indication contained in Section 153C of the Act that, the first proviso is only concerned with abatement or non-abatement of assessments and that it does not regulate the date from which the block of six AYs is to be computed. We find that, this identical line of argument was raised by the Revenue before the Hon'ble Delhi High Court in the case of Pr. CIT Vs Karina Airlines Internation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sjit Singh [2023] SCC Online SC 1265. The relevant paragraphs of the said decision are reproduced hereinbelow: - "8. In SSP Aviation (supra) the High Court inter alia reasoned as follows: - "14. Now there can be a situation when during the search conducted on one person under Section 132, some documents or valuable assets or books of account belonging to some other person, in whose case the search is not conducted, may be found. In such case, the Assessing Officer has to first be satisfied under Section 153C, which provides for the assessment of income of any other person, i.e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the Assessing Officer having jurisdiction over the other person. Thereafter, the Assessing Officer having jurisdiction over the other person has to proceed against him and issue notice to that 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 's prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts." 18. Insofar as the present appeal is concerned, on facts we find that while it is true that AO of the searched person as well as that of the respondent assessee was the same, undisputedly while in the case of the former, satisfaction was recorded on 29 March 2019, the AO in the case of the respondent assessee drew up a Satisfaction Note on 15 May 2019. 19. In order to appreciate the essential legislative objective underlying the handover of material and formation of opinion by the AO of the non-searched entity, we would have to bear the following aspects in mind. We firstly take note of the fact that Section 153C would get triggered firstly upon the Assessing Authority of the searched entity identifying documents or material which are found to relate to a person other than the entity which was subjected to search. In such a contingency, that Assessing Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed entity which would be of seminal importance and constitute the bedrock for commencement of action under Section 153C. 17. As far as the reliance placed by Revenue on the decision rendered by Single Judge Bench of Hon'ble Madras High Court in the case of R.K.M.Powergen (P) Ltd (supra) is concerned, it is noted that the Hon'ble Single Judge while disagreeing with the view taken in Sarwar Agency (supra) as well as RRJ Securities (supra) didn't take cognizance of the fact that the aforesaid decisions were rendered following the decision in the case of SSP Aviation (supra) which has since been affirmed by the Hon'ble Supreme Court in Jasjit Singh (supra) by holding as under :- "9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to Section 153(c)(1)] is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rejected. 19. Moreover, we note that, the Hon'ble Delhi High Court in the case of Pr.CIT Vs Ojjus Medicare (P) Ltd (supra) at Paras 51 to 84 has in detail analyzed the entire statutory framework of Section 153C of the Act from its introduction to the amendment by Finance Act, 2017 and its grandfathering by the Finance Act, 2021 and the relevant decisions on this subject including the decisions of Sarwar Agency Pvt. Ltd. (supra) & RKM Powergen (P) Ltd. (supra) relied upon by the Revenue. The Hon'ble High Court is noted to have accordingly concluded that, even post the amendment by Finance Act, 2017, the first proviso to section 153C shifts the relevant date from the date of initiation of search or a requisition made, to the date of hand-over of books of account or documents and assets seized to the AO of the non-searched person (or in its absence to the date of satisfaction note) and the said date shall be commencement point for reckoning the six or the ten AYs'. The relevant findings of the Hon'ble Delhi High Court, in this regard, which is found applicable in the present case, is noted to be as follows :- "7. ..... On 18 October 2019, a search and seizure ope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thered in the course of the search and pertaining to the non-searched person occurred between 01 April 2021 to 31 March 2022, the same would essentially constitute FY 2021-22 as being the previous year of search for the purposes of the non-searched entity. As a necessary corollary, the relevant AY would become AY 2022-23. AY 2022-23 would thus constitute the starting point for the purposes of identifying the six years which are spoken of in section 153C. The six AYs' are envisaged to be those which immediately precede the AY so identified with reference to the previous year of search. It would thus lead us to conclude that it would be the six AYs' immediately preceding AY 2022-23 which could have formed the basis for initiation of action under section 153C. Consequently, and reckoned backward, the six relevant AYs' would be :- Computation of the six-year block period as provided under section 153C of the Act No. of years AY 2021-22 1 AY 2020-21 2 AY 2019-20 3 AY 2018-19 4 AY 2017-18 5 AY 2016-17 6 Consequently, AY 2021-22 would become the first of the six preceding AYs' and would as per the table set out hereinabove terminate at AY 2016-17." 20. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 16. Following the above, we therefore hold that, in the given facts before us, the date of hand-over of seized material to the AO of the assessee was to be construed as the deemed date of search for ascertaining the six/ten year period which could be reopened u/s 153C of the Act. In the present case, it has been agreed that, the date of satisfaction note may be regarded as the date of receipt of books of accounts/ documents/ assets which is 31-12-2021 (AY 2022-23). Accordingly, ordinarily six AYs 2016-17 to 2021-22 could have been reopened by the AO u/s 153C of the Act. However, the question before us is to identify the 'relevant assessment year' for the purposes of computing the ten year block. It is noted that, Explanation 1 to section 153A of the Act specifies the manner in which the entire ten AY period is to be computed, which reads as follows :- "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uting the ten years. Section 153A(1)(b) states that the assessing officer shall assess or reassess the total income of six years immediately preceding the assessment year relevant to the previous year in which search is conducted. Applying this yardstick, the six years would go up to 2013- 14. The search assessment year, namely, 2019-20 has to be excluded. This is because, the statute talks of the six years preceding the search assessment year. But, while computing the ten assessment years, the starting point has to be the end of the search assessment year. In other words, search assessment year has to be including in the latter case. It is not for me to fathom the wisdom of the parliament. I cannot assume that the amendment introduced by the Finance Act, 2017 intended to bring in four more years over and above the six years already provided within the scope of the provision. When the law has prescribed a particular length, it is not for the court to stretch it. Plasticity is the new mantra in neuroscience, thanks to the teachings of Norman Doidge. It implies that contrary to settled wisdom, even brain structure can be changed. But not so when it comes to a provision in a taxing st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AY), provided the AO satisfies the essential conditions specified therein. The relevant portion of Section 153A of the Act i.e., fourth proviso to Section 153A of the Act, which has a bearing on the controversy in hand, is being reproduced below :- "Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless- (a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (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 2. For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account." 21. From a reading o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to be similar to the present case. In the decided case, [Fortune Vanijya Pvt Ltd supra] the AO had seized regular books and ledgers of the assessee from the premises of third person (searched person) and referring to these ledgers, the AO recorded his satisfaction note that, it had a bearing on the determination of total income of the assessee for the 7th AY (relevant assessment year) and therefore reopened the same u/s 153C read with fourth proviso to Section 153A of the Act. The AO completed the assessment u/s 153C/143(3) wherein the bank credits out of which loans were advanced in the regular books of accounts was added to the total income. On appeal, Tribunal explained the meaning of the term 'asset' as defined in Explanation (2) to Section 153A of the Act and the condition precedent set out in fourth proviso to Section 153A, which was required to be met prior to issuance of notice u/s 153C of the Act. The Tribunal held that the contents of seized material viz., regular books of accounts, were neither incriminating in nature nor in any manner revealed income represented in form of 'asset' which had escaped assessment and therefore in absence of this 'juri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act which defines 'Asset' for the purpose of fourth proviso to section 153A of the Act, clarify the intention of the Parliament to permit the AO to enlarge the assessment u/s. 153A after search u/s. 132 of the Act beyond six assessment years to ten assessment years preceding the searched assessment year, provided the AO has in his possession the essential jurisdictional fact i.e. "undisclosed/unaccounted asset" valued Rs 50 lakhs or more of the assessee discovered during search pertaining to 7th to 10th Assessment Year preceding the searched assessment year. Since the Parliament has used the expression 'income in the form of asset' and the definition of asset has been spelled out in the fourth proviso, this itself necessarily implies the liability/items falling in the left side of the Balance Sheet stands excluded. For this view of ours, we rely on the legal Maxim for interpretation "Expressio Unius Est Exlcusio Alterius" which principle states that, express mention of one is the exclusion of other and this maxim has been accepted by the Hon'ble Supreme Court in GVK Industries Ltd. Vs. ITO [197 Taxman 337] (Constitution bench of 5 Supreme Court Judges). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant seventh to tenth assessment year preceding the searched assessment year. Hence, the most important aspect is that, these 'assets' must have been found to be undisclosed or unaccounted, in the regular books of account maintained by the assessee, and discovered during the course of search, which otherwise would not have seen the light of the day but for the search, resulting in escapement of income. 22. It is to be kept in mind that, the term 'investment held in shares & securities' has to be considered with the term 'asset'. The term `investment held in shares & securities' and 'asset' are to be understood in their cognate sense, as it takes their colour from each other, i.e., the more general is restricted to a sense analogous to the less general. Hence, the term 'investment held in shares & securities' denotes discovery of an 'asset' in the form shares or securities, which is not found disclosed in the books of accounts or whose source of acquisition is unexplained and is thus found to have escaped assessment in the 7th- 10th AY preceding the search. It does not suggest or include the proceeds received by an assessee upo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... precedent in the fourth proviso to Section 153A of the Act. From this assertion/averment/admission, it is clear that AO did not have in his possession the jurisdictional fact [on or prior 05.12.2019] to invoke and issue notice u/s. 153C of the Act. The extended jurisdiction to invoke/assess 7 th - 10th AY is conferred on the AO by authority of law and the AO cannot confer to himself the jurisdiction in a casual manner by stating/substituting the specific jurisdictional fact. It is imperative that before issuance of notice u/s 153C [for the extended period], the AO sets out his objective satisfaction from the seized material, the details of the specified/undisclosed assets in his possession qua the assessee for AY 2011-12 valued Rs. 50 lakhs or more. If this essential requirement of law is not satisfied, the AO does not get the authority of law to invoke the jurisdiction u/s 153A of the Act for 7th to 10th AY. For this, we rely upon the dictum of the Privy Council in Nazir Ahmed Vs. King Emperor AIR 1936 PC 253(which has since been accepted and later followed by Hon'ble Supreme Court), that when a statute requires a thing to be done in a particular manner, it must be done in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AO by authority of law and the AO cannot confer to himself the jurisdiction in a casual manner by stating/substituting the specific jurisdictional fact. It is imperative that before issuance of notice u/s 153C (for the extended period) the AO sets out his objective satisfaction from the seized material, the details of the specified/undisclosed assets in possession qua the assessee for AY 2011-12 valued at Rs. 50 lacs or more. If this essential requirement of law is not satisfied, the AO does not get the authority of law to invoke the jurisdiction u/s 153A of the Act for 7th to 10th AY. At the cost of repetition, it is pertinent to mention that the assessee had disclosed the sale transactions and liquidation of shares in his regular books of accounts and the liquidation of shares were received in bank. Thus the aforementioned assets cannot be termed as undisclosed assets. It has been appositely concluded in the concurrent decisions of the CITA and ITAT that it cannot be held that the allegedly undisclosed assets have escaped assessment." 24. In light of the ratio decidendi laid down above, we now revert back to the facts involved in the present case. We have carefully gone through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recorded his satisfaction that income represented in the form of 'asset' had escaped assessment only in AY 2010-11. Clearly therefore, the AO has nowhere expressed his satisfaction that any income represented in the form of 'asset' had escaped assessment qua AYs 2012- 13 & 2013-14 as well. 26. Having regard to the foregoing and following the decision (supra), we accordingly hold that, the seized material ANN/MS/JMG/LS/S-1 in question didn't contain any information relating to unexplained/ undisclosed asset as defined in Explanation 2 to the fourth proviso of Section 153A of the Act. According to us, the AO was not in possession of any evidence / material which suggested that income represented in form of an 'asset' had escaped tax in these AYs 2012- 13 & 2013-14 and therefore the 'jurisdictional fact' as prescribed under the fourth proviso to Section 153A of the Act is found to be absent and the AO is noted to have usurped jurisdiction u/s 153C r.w.s 153A of the Act on wrong assumption of jurisdictional fact. As a consequence, we hold that the AO could not have legally proceeded further with the reassessment for AYs 2012-13 & 2013-14. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment years which are not pending before the AO [i.e. in case where the searched assessee's assessments are completed u/s. 143(3) or 148 or 153A/153C of the Act or if the mandatory scrutiny assessment notices u/s. 143(2) of the Act has become time barred], then those assessment years to be treated as unabated assessments and by virtue of the second proviso to section 153A(1) of the Act, assessment u/s. 153A/153C has to be essentially based on the documents unearthed during the course of search and seizure operations. Accordingly, like Section 153A, the assessment under section 153C of the Act for the unabated AYs can be made only based on the incriminating material found/unearthed during search. 29. For determining the abated/unabated assessment u/s 153C of the Act, the date of search is required to be ascertained in terms of first proviso to Section 153C of the Act. In the present case, irrespective whether the date of search is taken to be 25-02-2020 (date of original search) or 31-12-2021 (date of satisfaction note), the assessment for AYs 2012-13 & 2013-14 are unabated assessments. In the circumstances, the assessment u/s 153C of the Act for the relevant AYs 2012-13 & 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein it was held as under:- "In case where no incriminating material is unearthed during the search, the AO cannot assess or reassess taking into consideration the other material in respect of completed assessments/unabated assessments. Meaning thereby, in respect of completed/unabated assessment, no addition can be made by the AO in absence of any incriminating material found during the course of search u/s 132 or requisition u/s 132A of the Act, 1961." 31. Following the above judgement (supra), it is noted that the Hon'ble Supreme Court in the case of DCIT vs U.K. Paints (Overseas) Limited (454 ITR 441) has held that, in absence of any incriminating material which was found from the premise of the third party (searched person), no addition/s is permissible in an unabated assessment u/s 153C of the Act of the assessee (other person). The relevant findings taken note of by us are as follows: "1. In this batch of appeals, the assessments in case of each assessee were under section 153-C of the Income-tax Act, 1961 (for short, `the Act'). As found by the High Court in none of the cases any incriminating material was found during the search either from the Assessee or from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sold at cost, appropriate entries were passed in its books of account maintained in the course of regular business and the bank ledger reflected the payments received through banking channel upon sale of investments, which were subsequently deployed by way of loans & advances. Having examined the same, we find these documents were print-outs of the day books from the regular books maintained electronically by the assessee. On examination of the entries in the documents, we find that the entries in the ledgers tallied with the bank statement of the assessee. We thus find that these documents formed part of the regular books of the assessee and did not have any incriminating content whatsoever. When confronted with the same, even the Ld. CIT, DR was unable to correlate or link as to how the contents of these documents led to unearthing of unexplained income, that too represented by an 'asset' by the AO in these AYs 2012-13 & 2013-14. We also note that the investments which were sold during the relevant year and which find mention in these ledgers are reflected in the Investment Schedule appearing in the assessee's balance sheet. Having regard to the foregoing facts, we th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tained in the course of regular business and the bank ledger reflected the payments received through banking channel upon sale of investments. Having examined the same, we also find it to be print-outs of the day books from the regular books maintained electronically by the assessee. On examination of the entries in the document, it is noted that the journal ledger inter alia contains journal entries passed during FY 2010-11 in relation to investments sold to several parties. And we find that the entries in the bank ledger tallied with the bank statement of the assessee. We thus find that these ledgers therefore formed part of the regular books of the assessee and did not have any incriminating content whatsoever. When confronted with the same, even the Ld. CIT, DR was unable to correlate or link as to how the contents of this ledgers led to unearthing of unexplained income, that too represented by an "asset" by the AO. We also note that the investments which were sold during the relevant year and which find mention in these ledgers are reflected in the Investment Schedule appearing in the assessee's balance sheet as on 31-03-2010. In this context, it has been brought to our no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat is apparent is not real or what is real is not apparent. In other words, if an assessee has recorded transactions in his books or other documents maintained in the ordinary course then in order to hold the material or evidence found in the course of search to be incriminating in nature, the seized document should lead to the conclusion that the entries made in the books of the assessee do not represent true and correct state of affairs. The evidence unearthed or found in the course of search should establish that the real transaction of the assessee was something different than what was recorded in the regular books and therefore the entries in the books did not represent true and correct state of affairs i.e. the assessee has undisclosed income/expense outside the books or that the assessee is conducting income earning activity outside the books of accounts or all the revenue earning activities are not disclosed to the tax authorities in the books regular maintained or the returns filed with the authorities from time to time etc. The nature of the evidence or information gathered during the search should be of such nature that it should not merely raise doubt or suspicion, but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of printouts from regular books of accounts of the assessee maintained in computerized system and all the entries mentioned therein forms part of regular books of accounts. The AO was not satisfied with the explanation of one of the Directors of Sagar Group whose statement was recorded u/s 132(4) of the Act. As the satisfaction note scrutinized by the CITA as well as the ITAT did not reveal any asset, the addition made by the AO in AY 2011- 12 on account of unexplained cash-credit represented by sale proceeds of Rs. 9,63,00,000/- is held to be made without jurisdiction. Thus, it can safely be concluded that the contents of seized material are neither incriminating in nature nor do they in any manner reveal "income represented in form of 'assets' which had escaped assessment." This satisfaction note dated 13-12-2019 has been referred to by the ITAT and it has not been disputed by the appellants. 22. It has been observed by the Hon'ble Supreme Court in the case of Pr. CIT v. Abhisar Buildwell (P.) Ltd. [2023] 149 taxmann.com 399/293 Taxman 141/454 ITR 212, dated 24-4-2023, in Civil Appeal No. 6580 of 2021 and other connected appeals filed by the revenue that 23. After ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee and accordingly upheld the orders of the lower authorities deleting the impugned additions by observing as under: "32. In the present case, the two seized documents referred to in the Satisfaction Note in the case of each Assessee are the trial balance and balance sheet for a period of five months in 2010. In the first place, they do not relate to the AYs for which the assessments were reopened in the case of both assessees. Secondly, they cannot be said to be incriminating. Even for the AY to which they related, i.e. AY 2011-12, the AO finalised the assessment at the returned income qua each Assessee without making any additions on the basis of those documents. Consequently even the second essential requirement for assumption of jurisdiction under Section 153 C of the Act was not met in the case of the two Assessees 33. This Court does not consider it necessary to examine the merits of the case as far as the deletions by the CIT (A) of the additions made by the AO under Section 153C of the Act are concerned. In any event, a detailed analysis has been undertaken by the CIT (A) of the materials produced by the Assessee which justified the deletion of such additions. E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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