HIGH COURT OF GUJARAT
Kamleshbhai Dharamshibhai Patel
Commissioner of Income-tax
Special Civil Application Nos.13635, 13636 & 13643 of 2012
DECEMBER 24, 2012
Akil Kureshi, J. – These petitions arise out of common factual background. They are therefore, heard together and are being disposed of by this common judgment.
We may notice the facts as arising in Special Civil Application No. 13643 of 2012.
The petitioner is an individual and is assessed to tax under the Income-tax Act, 1961 [“Act” for short]. The petitioner has challenged the order dated 2nd February 2012 passed by the Commissioner of Income-tax, Ahmedabad under Section 127  of the Act by which he clubbed and consolidated the assessment proceedings of the petitioner and other family members with ACIT, Central Circle-2(1), Ahmedabad. The petitioner has also challenged the notice dated 25th September 2012 issued under Section 153C of the Act.
The petitioner and other family members sold three parcels of land situated in the City of Ahmedabad to a Sanghvi Group operating in the name of Sanghvi Infracon Pvt. Ltd., who were engaged in the construction business. Search and seizure operations were carried out on the business premises of the said Sanghvi Infracon Pvt. Ltd. and other related persons on 9th March 2011. On the premise that certain documents belonging to the petitioner and other family members were found from the business premises of the said searched person, summons under Section 131(1A) of the Act was issued against the petitioner on 24th June 2011. A notice under Section 153C of the Act came to be issued by the Assistant Commissioner of Income Tax, Central Circle, 2(4) Ahmedabad against the petitioner and others on 25th September 2012, in which it was stated as under :
“A search U/s. 132 of the Income-tax Act was conducted in Group cases of Sanghvi Group (Shri Dhirajlal Vaghjibhai Sanghvi and others), on 09.03.2011. The income-tax of six assessment years immediately preceding the from A.Y. 2005-06 to 2010-11 is required to be assessed/re-assessed in your 153C r.w.s. 153(A) of the Income-tax Act, 1961 for A.Y. 2005-2006 being one out of the above six assessment years in respect of which you are assessable under the Income-tax Act, 1961. The return should be filed in the appropriate form as prescribed in Rule 12 of the Income-tax Rules, 1962. It should be duly verified and signed in accordance with the provisions of section 140 of the said Act and delivered at any office as mentioned above within fifteen days from the service of the notice.”
The respondents along with the reply have produced reasons for issuance of notice under Section 153C of the Act, which were recorded on 24th September 2011 by the Assistant Commissioner of Income Tax, which reads as under :
“A search U/s. 132 of the Income-tax Act was conducted in Group cases of Sanghvi Group (Shri Dhirajlal Vaghjibhai Sanghvi and others), on 09.03.2011. Search was also carried out at residential premises of Shir Dhirajlal Vaghjibhai Sanghvi At A-14, Tirthbhumi Appartments, Opp. Law Garden, Ellisbridge, Ahmedabad. During the course of search one loose paper file consisting of 102 pages was found which was seized and inventorized as per annexure A-1. The documents seized are as under :-
(a) Pages 65 to 92 are sale deed of land (Survey No. 3) of Nava Vadaj, Ahmedabad which was sold by Shri Kamlesh Dharmsibhai Patel & Others.
(b) Pages 46 to 64 are sale deed of land (Survey No. 13) of Nava Vadaj, Ahmedabad which was sold by Shri Sanjay D. Patel & Kamlesh D. Patel. Both the documents are duly signed by Shir Kamlesh Dharamsibhai Patel.
(c) Further, Agreement relating to return of possession
i. between Bansilal Babubhai Chaudhary and Shri Kamlesh Dharmsibhai Patel/Sanjay Dharmasibhai Patel was also seized at Pages 40 to 45.
ii. between Lilaben Bhadriprasad Bhulji and Shri Kamlesh Dharamsibhai Patel/Sanjay Dharamsibhai Patel was also seized at Pages 36 to 39.
iii. between Bhimjibhai Amarsinh Chauhan and Shri Kamlesh Dharmsibhai Patel/Sanjay Dharmsibhai Patel was also sized at Pages 32 to 35.
All the above documents are duly signed by Shir Kamlesh Dharamsibhai Patel. Thus, documents belonging to Shri Kamlesh Dharmsibhai Patel were seized from the residential premises of Shri Dhirajlal Vaghjibhai Sanghvi.
In view of above facts, I am satisfied that all the prerequisite conditions of section 153C of the Act are fulfilled and therefore, it is a fit case for issuing of notice u/s. 153C r.w.s. 153A of the Act. Therefore, Notice u/s. 153C of the Act is issued to the assessee.”
As noted, the petitioners filed these petitions, challenging the order passed by the Commissioner of Income Tax under Section 127(2) of the Act as also the notices issued under Section 153C of the Act on various grounds. However, while making oral submissions before us learned Counsel gave up challenge to the impugned order dated 2nd February 2012 passed under Section 127(2) of the Act but maintained the challenge of the petitioners to the notices issued under Section 153C of the Act.
Before recording and dealing with the rival contentions, we may recall that as per the reasons recorded by the Assistant Commissioner of Income Tax for initiating action under Section 153C of the Act against the petitioners, he had relied upon certain documents found from the possession of Sanghvi Infracon Pvt. Ltd. during the search operation at their business premises. Such documents were (1) Sale deeds of the land in question and (2) agreement entered into by and between the tenant of the said property and petitioners on various dates. In some cases, the authority has relied on receipts of payments along with the sale deeds; whereas in other cases, reliance is placed only on sale deeds. We shall therefore judge the validity of the notices on the basis of all such grounds.
Learned Counsel Shri R. K. Patel appearing for the petitioners vehemently contended that none of the documents found from the persons searched could be stated to belong to the petitioners. He submitted that under Section 153C of the Act action can be taken only if any money, bullion, jewellery or other valuable articles or things or books of account or documents seized or requisitioned belong to a person other than the person searched. He submitted that when the lands in question were already sold in favour of Sanghvi Infracon Pvt. Ltd. under the sale dated 18th September 2010, these documents in question cannot be stated to belong to the petitioners. As per his contention, once the title in the land vested in the purchases, none of the documents could be stated to belong to the petitioners.
Heavy reliance was placed on the decision of Devision Bench of this Court in case of Vijaybhai N. Chandrani v. Assistant Commissioner of Income-tax  333 ITR 436, wherein the Court had an occasioned to interpret the term “belongs to” used in Section 153C of the Act. We will refer to the said decision at a later stage.
For our perusal, Counsel produced on record photo copies of some of the documents which were entered into between the petitioners and the tenants.
On the other hand, learned Counsel Shri Manish Bhatt appearing for the Revenue submitted that the satisfaction note recorded by the authority leaves no room for doubt. Documents belonging to the petitioners were seized during the search and seizure operation carried out at the business premises of Sanghvi Infracon Pvt. Ltd. He submitted that simply because property was later on transferred by the owners would not change the nature of ownership of the documents in question.
Counsel relied upon decision of Division Bench of Delhi High Court in case of SSP Aviation Ltd. v. Deputy Commissioner of Income Tax  346 ITR 177, wherein in the context of Section 153C of the Act the Court observed as under :-
“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 documents 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.
15. It needs to be appreciated that the satisfaction that is required to be reached by the Assessing Officer having jurisdiction over the searched person is that the valuable articles or books of account or documents seized during the search belong to a person other than the searched person. There is no requirement in section 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must be shown to show to conclusively reflect or disclose any undisclosed income.”
Learned counsel Ms. Paurami Sheth also appeared for the Revenue and submitted that since the petitioners had given up their challenge to the order passed under Section 127(2) of the Act, she has no further submissions to make.
Having thus heard learned counsel for the parties and upon perusal of the documents on record, a pointed question that arises for our consideration is whether the action of the respondents under Section 153C of the Act can be stated to be invalid in the facts of the case. To recapitulate the facts – the petitioners held certain parcels of land in the city of Ahmedabad. Such lands were sold to Sanghvi Infracon Pvt. Limited by executing Sale Deeds dated 18th September 2010. Subsequently, Sanghvi Group was subjected to search and seizure operations during which time, certain documents were seized. It is the case of the Revenue that huge cash amounts were paid for purchase of the land which were received by the petitioners. We are not concerned with these allegations at this stage. What is relevant for us is to determine whether the sale-documents executed in favour of the petitioners and the agreements executed by the tenants of the lands in favour of the petitioners and other documents relied upon by revenue are the documents belonging to the petitioners and that therefore, action under Section 153C of the Act is valid.
Section 153C of the Act pertains to Assessment of income of any person other than the person searched and relevant portion thereof reads as under :-
“153C :- Assessment of income of any other person.
Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153 where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other that the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A.
Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to [sub-section (1) of] section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person.”
From the above, it can be seen that sub-section (1) of Section 153C of the Act starts with non obstante clause and provides that, notwithstanding anything contained in Sections 139, 147, 148, 149, 151 or Section 153 of the Act, if the requirements of the said sub-section are satisfied, the Assessing Officer having jurisdiction over the person other than the person searched shall proceed against such other person and issue notice and assess or re-assess income of such a person in accordance with the provisions contained in Section 153A of the Act. Requirements for assuming jurisdiction under sub-section (1) of Section 153C therefore are that the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in Section 153A of the Act. In such a case, he shall hand over to the Assessing Officer having jurisdiction over such other person, the books of account or documents or documents or assets seized or requisitioned. Importantly therefore, to initiate any action under Section 153C of the Act, it is essential that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned should belong to a person other than the person referred to in Section 153A of the Act.
It was in this background that the Division Bench of this Court in case of Vijaybhai N. Chandrani [Supra] quashed the action of the Revenue authorities when it was found that copies of loose sheets of papers which were found during the search cannot be stated to belong to the person other than the searched person. It was the case wherein, on the basis of such documents seized during search operations on a builder, action under Section 153C of the Act was initiated against the purchasers of the properties constructed by the searched person. It was on this point that the Court held and observed as under :-
“13. Thus a condition precedent for issuing notice under section 153C and assessing or reassessing income of such other person, is that the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned should belong to such person. It the said requirement is not satisfied, recourse cannot be had to the provisions of section 153C of the Act.
14. Examining the facts of the present case in the light of the aforesaid statutory scheme, it is an admitted position as emerging from the record of the case, that the documents in question, namely the three loose papers recovered during the search proceedings do not belong to the petitioner. It may be that there is a reference to the petitioner inasmuch as his name is reflected in the list under the heading Samutkarsh Members Details and certain details are given under different columns against the name of the petitioner along with other members, however, it is nobody’s case that the said documents belong to the petitioner. It is not even the case of the Revenue that the said three documents are in the handwriting of the petitioner. In the circumstances, when the condition precedent for issuance of notice is not fulfilled any action taken under section 153C of the Act stands vitiated.”
Facts being vitally different, the ratio laid down in the said decision would not apply in the present case. In the present case, the set of documents relied upon by the Revenue pertain to sale deeds executed by the petitioners in favour of the purchases viz., M/s. Sanghvi Infracon Private Limited and agreements entered into between the erstwhile tenants of the said lands and the petitioners. As noted earlier, in some cases reliance is placed on the sale deeds alone and in some additionally on the receipts of payments. In the present case, we find that the documents viz., agreements between the tenants of the petitioners would certainly satisfy the requirement of Section 153C of the Act. We may, to support such conclusions, have a slightly closure look at such documents. These documents are worded similarly. We may, therefore, record narration found in one such document executed on 23rd August 2010 between Bansibhai Babubhai Chaudhary – the party on the first part and Kamleshbhai Dharamshibhai Patel and Sanjaykumar Dharamshibhai Patel – petitioners herein [as party of the second part]. In such document, it is stated that the parties of the second part had purchased land on 3rd December 2007 by a registered sale deed. The party of the first part occupied three rooms constructed on such land as a tenant. The party of the second part required the land with vacant possession. The party of the first part did not require tenanted property any longer. The party of the second part therefore paid a total consideration of Rs. 24,00,000/= calculating Rs. 8,00,000/= per room to the party of the first part, upon which he had handed over vacant and peaceful possession of the said tenanted property to the party of the second part. In paragraph 5 of the said agreement, it was specifically provided that the party of the first part had not entered into any other transaction with respect to the tenanted properties. In paragraph 6 thereof, it was stated that the party of the first part would present himself for executing any document in favour of the party of the second part before any authorities; whenever required.
From the above, it emerges that the portion of land in question were occupied by tenants. In order to not only give a clear marketable title to the purchaser but also give the vacant possession of the entire land, the petitioners before executing the Sale Deeds entered into agreements with the tenants under which, the tenants vacated the premises and handed over possession to the petitioners in consideration of seizable amount paid to them. This was done through several agreements executed between the tenants and the petitioners. Later on, the lands were sold to M/s. Sanghvi Infracon Private Limited by a registered sale deed dated 16th September 2010.
What ever be the position of title of the lands post 16th September 2010, it can hardly be disputed that the documents in question belong to the petitioners. The petitioners required vacant possession of the land to be able to pass on the title and vacant possession. To be able to do so, the petitioners entered into agreements with the tenants. Such documents thus are documents which definitely belong to the petitioners. Simply because on subsequent date, the land was sold, may have a bearing on the title of such land, the same would not in any manner alter the nature of the document concerned. Such documents belong to the petitioners and continue to so belong, irrespective of the transfer of the title of the land. We do not see how the petitioners can contend that simply because at a subsequent point of time they disposed of the property and transferred the title to the purchasers, the documents since to belong to them. The term “belong to” has not been defined in the Act. In the Webster’s Third New Intl. Dictionary, the word, “belong” is described as, “to have relation or reference to a person or thing”.In Advanced Law Lexicon by P. Ramanatha Aiyar [3rd Edition], the term, “belong”in context of Section 400 IPC means, “implied something more than the idea of casual association; it involves a notion of continuity and indicates a more or less intimate connection with a body of persons extending over a period of time sufficiently long to warrant the inference that the person affected was identified himself with a band, the common purpose of which is the habitual commission of dacoity.”
The document executed between the erstwhile tenants of the petitioners regarding eviction of the tenants upon acceptance of sizeable payment by the petitioners definitely thus belong to the petitioners. It may be that as an evidence of passing on vacant and peaceful possession of the property, the petitioners handed over such documents to the purchasers to protect the interest of the purchasers against any action that may be initiated by the erstwhile tenants. The nature of the document or the fact that it belongs to the petitioners would not in any manner change.
Likewise, the documents of sale also can be stated to belong to the petitioners. It is not in dispute that the petitioners were the sellers of the lands. They do not either doubt or dispute the documents of sale, or their respective signatures thereon. Term “belong”is not defined and does not have legally technical connotation and therefore, we once again fall back on the dictionary meaning of the same. We need to ascertain if such document can be stated to “have relation or reference to” to the petitioners. As noted, the petitioners were as sellers of the land, parties to the documents. They had admittedly executed such sale deeds. It cannot be stated that the sale deeds do not belong to them. Likewise, the receipts of payments also are documents belonging to the petitioners. They are alleged to have received various payments in cash from the purchasers. If there are documents evidencing such particulars and if such documents are also signed by the petitioners, it can certainly be stated that such documents do belong to the petitioners.
Under the circumstances, we are of the opinion that the action initiated under Section 153C of the Act cannot be quashed on the ground on which writ petitions are presented before us. Petitions are therefore dismissed.