Case Law Details

Case Name : Dy. CIT v. National Standard India Ltd. (ITAT Mumbai)
Appeal Number : ITA Nos. 4055 to 4060 (Mum.) of 2015
Date of Judgement/Order : 28/07/2017
Related Assessment Year : 2005-06 To 2010-11
Courts : All ITAT (4430) ITAT Mumbai (1461)

DCIT v. National Standard India Ltd. (ITAT Mumbai)

Assumption of jurisdiction over assessee under section 153C on the basis of statement of searched person, however, seized documents making no reference of either the assessee or any transaction entered into by it, was highly misplaced and, therefore, set aside.

Assessing officer in his attempt to justify the validity of the jurisdiction assumed by him under section 153C in the case of the assessee, had therein referred to and taken support of the statement of Shri Abhinandan Lodha recorded under section 132(4) during the course of search and seizure proceedings conducted in the case of Lodha group (supra), wherein a disclosure of Rs. 110.25 lacs was made by him as regards sale of parking space in the hands of the assessee company for assessment year 2011-12. The learned Authorised Representative submitted that as per the settled position of law, the assumption of jurisdiction under section 153C requires that a ‘document’ belonging to a person other than the person referred to a Section 153A is seized during the course of the search proceedings, and as a ‘Statement’ recorded during the course of search proceedings cannot be equated with a ‘seized document’, therefore, the reliance placed by the assessing officer on the statement of Shri Abhinandan Lodha (supra) in his attempt to justify the validity of assumption of jurisdiction under section 153C in the case of the assessee company, was highly misplaced. The learned Authorised Representative in order to drive home his aforesaid contention therein took support of the judgment of the Hon’ble High Court of Delhi in the case of CIT v. Rajpal Bhatia (2011) 202 Taxman 140 (Mag.) : 333 ITR 315 (Delhi), wherein the Hon’ble High Court by referring to the pari materia provisions contained in Section 158BD, had therein observed that the statement of a person subjected to search proceedings under section 132 could not be construed as a ‘document’ seized during the course of the search proceedings. The learned Authorised Representative further in support of his aforesaid contention relied on the order of the ITAT, Jodhpur Bench, in the case of Chitra Devi v. Asstt. CIT (2002) 77 TTJ 640. Alternatively, it was submitted by the learned Authorised Representative that as the disclosure of additional income of Rs. 110.25 lacs made in the hands of the assessee company by Sh. Abhinandan Lodha (supra) in his statement recorded under section 132(4) during the course of search and seizure proceedings conducted in the case of Lodha group (supra), was in respect of assessment year 2011-12 and did not pertain to any of the years in respect of which jurisdiction had been assumed by the assessing officer under 153C in the case of the assessee company, therefore, the same on the said count also would not in any way go to validate the assumption of jurisdiction by the assessing officer under section 153C. Thus in the backdrop of the aforesaid submissions it was averred by the learned Authorised Representative that as no ‘document’ pertaining to or referring to the assessee company, much the less ‘belonging’ to the latter was seized during the course of the search proceedings, therefore, the assessing officer had transgressed the scope of his jurisdiction under section 153C and had wrongly framed assessment under section 153A row with section 153C/143(3) in the hands of the assessee company.

Full Text of the ITAT Order is as follows:-

The present appeals filed by the revenue are directed against the consolidated order passed by the Commissioner (Appeals)-48, Mumbai for assessment year 2005-06 to assessment year 2010-11, dated 24-4-2015, which in itself arises from the respective orders passed by the assessing officer under section 153A row with section 153C/143(3) of the Income Tax Act, 1961 (for short ‘Act’), each dated. 31-3-2013. That as a common issue is involved in the respective appeals, therefore, for the sake of convenience they are clubbed and disposed of by a consolidated order. We herein first take up the appeal for assessment year 2005-06, marked as ITA No. 4055/Mum/2015. The revenue being aggrieved with the order of the Commissioner (Appeals) had therein raised before us the following grounds of appeal:–

“Whether on the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) was justified in dismissing the assessment orders made under section 153C of the Income Tax Act on the grounds that no seized documents pertain to the assessee, even though the assessing officer had recorded his satisfaction in the orders sheet dated 24-9-2012 with regard to incriminating material on record found during search.

The appellant prays that the order of Commissioner (Appeals) on the above ground be set aside and that of the assessing officer be restored.

The appellant craves leave to amend or alter any ground and/or add a new ground which may be necessary”.

BRIEF BACKGROUND OF THE ASSESSEE COMPANY

2. The assessee is a listed public limited company which was earlier engaged in the business of manufacturing of tyre moulds, bead wire and allied items. The assessee company was initially promoted by the Duncan group as National Standard Duncan Limited with facilities to manufacture tyre bead wires and tyre moulds, tyre drums and bead wire making machinery at Thane (Maharashtra), Dodaballapur and Hoskote (Karnataka) and Baddi (Himachal Pradesh). That as the assessee company turned sick, therefore, pursuant to a reference filed with the Board for Industrial and Financial Reconstruction (BIFR) in the year 2000, the company was declared sick under the Sick Industrial Companies (Special Provisions) Act, 1985 (SICA) as on 28-1-2002. The management of the assessee company was thereafter taken over by a group of technocrats led by Shri N.P.S. Shinh and Dr. A.L. Ananthanarayanan in the year 2002. That in lieu of the order passed by the BIFR in the year 2006, tyre moulds unit was demerged into a new company, viz. National Standard Tyre Moulds (I) Ltd., subject to compliance of certain conditions. The assessee company was left with its bead tyre business and land at Thane, which comprised of two plots admeasuring about 8 acres. The assessee company was acquired by a Wholly Owned Subsidiary company of Lodha Developers Ltd., viz. M/s. Ananthanarayanan Construction and Farms Pvt. Ltd., which purchased its 14.98% shares on 17-5-2010, and 58.96% shares on 19-5-2011. That pursuant to the aforesaid developments the management of the company changed hands and in May 2010, the Lodha Group were inducted as the promoters of the company and the main object of the company was changed to real estate development.

BRIEF FACTS OF THE CASE

3. Briefly stated, the facts of the case are that search and seizure action was carried on 10-1-2011 in the hands of the Lodha Group of entities, which included individual members of the Lodha family, as well as the group companies and entities. That as the assessee company had became a part of Lodha Group (supra) in the year 2010, therefore, at the time of the search action, its premises at Wagle estate where the project of the Lodha Group (supra), viz. Lodha Excellencia was coming up, was covered under section 133A. That during the course of the search and seizure proceedings the key person of the Lodha Group (supra), viz. Shri Abhinandan Lodha came up with a disclosure of Rs. 199.80 crores and offered the same as additional income in his statement recorded under section 132(4) on 11/12-1-2011, which thereafter was confirmed by him again in his statement recorded under section 132(4) on 10-3-2011, and details of the unaccounted income was furnished by him in Annexure-1 in respect of various entities of the Lodha Group (supra). That a perusal of the aforementioned Annexure-1 therein revealed that the additional income of Rs. 199.80 crores offered by Shri Abhinandan Lodha in his disclosure made in the statememt recorded under section 132(4) included an amount of Rs. 110.25 lacs in respect of sale of parking space in the hands of the assessee company in assessment year 2011-12. Thereafter, the entities of the Lodha Group (supra) filed an application before the Settlement Commission, Mumbai, wherein admission was made in respect of the unaccounted income, which interalia included the amount of on-money claimed to have been received in respect of sale of flats and parking space. It may however be relevant and pertinent to point out that the assessee company had however not approached the Settlement Commission.

4. That pursuant to the search and seizure action assessment proceedings were initiated under section 153C of the ‘Act’ in the hands of the assessee company. The assessing officer vide his order dated 31-3-2013 passed under section 153A row with section 153C/143(3), after deliberating on certain issues, assessed the loss in the hands of the assessee company at (Rs. 6,40,575), as against the latters returned loss of (Rs. 3,62,51,460). The assessee assailing the validity of the jurisdiction assumed by the assessing officer in its case under section 153C, as well as challenging the additions/disallowances made by the assessing officer in its hands on merits, carried the matter in appeal before the Commissioner (Appeals).

5. The Commissioner (Appeals) after deliberating on the contentions raised by the assessee in respect of the additions made in its hands on merits, therein observed that the assessee had challenged the validity of the very assumption of jurisdiction by the assessing officer under Section 153C in the year under consideration and in the succeeding years, viz. assessment year 2006- 07 to assessment year 2010-11. The Commissioner (Appeals) finding himself to be in agreement with the assessee that the assessing officer had wrongly assumed jurisdiction under section 153C, thus quashed the assessment framed by the assessing officer under section 153A row with section 153C/143(3) on the said count itself, and therefore refrained from adjudicating the contentions of the assessee raised in context of the respective additions on merits. The Commissioner (Appeals) being of the considered view that the assessing officer was not justified in initiating proceedings under section 153C in the hands of the assessee for the year under consideration, and the succeeding years, viz. assessment year 2006-07 to assessment year 2010-11, therein observed as under: —

“5.11. I have perused the document pages 107-108 relied on by the assessing officer for assuming jurisdiction under section 153C of the Act. This document is a minutes of SCUD meeting giving details of projects, customers, flat booked by them, area of the flat, consideration, and deviation from listed price. The remarks column explains the deviation and indicates in many cases payment in cash euphemistically referred to as “payment in other mode”. However, this document does not make any reference to any project of the appellant in this case viz. Lodha Excellencia. The seized document does indicate the modus operandi of the Lodha Group of receiving on-money. However, this seized document, in respect of which the assessing officer has required the appellant to provide the explanation, does not bear any reference to the transactions entered into by the appellant, so as to enable assumption of jurisdiction under section 153C. From the perusal of the facts of the case it can only be said that the assessing officer in order to assume jurisdiction under section 153C of the Act has placed its reliance on the statement recorded on oath of the key person of the group and has not shown any seized document that can be said to be belonging to the appellant. Further, the statement too is only in respect of transactions in assessment year 2011-12 in respect of building project Lodha Excellencia which is the year of search. In any case there is no reference to the earlier assessment years for which the present appeals are before me and the additions made therein in these assessment years are not based on any similar issue covered in the admission made in the statement recorded of Shri Abhinandan Lodha. I am aware that there is an amendment proposed in the finance bill 2015 to section 153C wherein jurisdiction under section 153C would be available to the assessing officer even where the seized documents pertain to or the information contained therein relates to a person other than a person referred to under section 153A. Thus it will not be restricted to cases where such document belongs to such other person. This will have an effect of making some of the case laws cited by appellant inapplicable, which emphasize the requirement that such seized, documents must belong to a person other than a person referred to under section 153A. However, this is not a retrospective amendment and will be effective from 1-6-2015. In the present case, the assessing officer has failed to indicate any seized document that pertains to the appellant, much less belongs to the appellant to assume jurisdiction under section 153C. Information gathered in survey conducted in the present case is certainly valid for use in assessment for assessment year 2011-12 but is of no use in the present case for the purposes of jurisdiction for assessment under section 153C for assessment year 2005-06 to assessment year 2010-11. Taking all the above facts into consideration that no document belonging to or pertaining to the appellant was seized at the time of search and seizure action and also the judicial pronouncements on similar issue as relied upon by the appellant, I am of the considered view that the requirement under the statute for the assessing officer to meet the primary condition for issue of notices under section 153C of the Income-tax Act are not satisfied and, hence, the assessing officer was not justified in initiating proceedings under section 153C of the Income Tax Act for all the assessment years under dispute”.

6. The department being aggrieved with the striking down of the assessment on the ground that the assessing officer had wrongly assumed jurisdiction under section 153C, had therein carried the matter in appeal before us. That during the course of the hearing of the appeal it was vehemently submitted by the learned Departmental Representative (for short D.R.) that the Commissioner (Appeals) had wrongly concluded that the assumption of jurisdiction by the assessing officer under Section 153C was not in conformity with the provisions contemplated under the said statutory provision. It was submitted by the learned Departmental Representative that as the assessing officer of the searched person by referring to the ‘loose papers’ marked as Annexure A-4 – Page no. 107-108 seized during the course of the search and seizure proceedings conducted on the Lodha Group (supra), had recorded his satisfaction in the ‘Order sheet’ dated 24-9-2012, therefore, there was enough incriminating material on record which justified the assumption of jurisdiction by the assessing officer under section 153C in the hands of the assessee company. It was further submitted by the learned Departmental Representative that the assessing officer during the course of the assessment proceedings had vide his ‘Order sheet’ noting dated 18-3-2013 called upon the assessee to show cause as to why the receipt of on-money as was discernible from a perusal of the aforesaid ‘loose papers’, viz. Page No. 107-108 may not be added as its income from undisclosed sources. The learned Departmental Representative in order to support his contention that now when the assessing officer had issued a Notice under section 153C to the assessee after satisfying himself with the contents of the seized documents, the same would thus justifiably suffice the satisfaction of the preconditions contemplated under the said statutory provision, viz. section 153C therein relied on the judgments of the Hon’ble High Court of Delhi in the case of Pr. CIT v. Super Malls (P.) Ltd. (2017) 393 ITR 557 and SSP Aviation Ltd. v. Dy. CIT (2012) 207 Taxman 260 : 346 ITR 177 (Delhi). The learned Departmental Representative in order to support the validity of the assumption of jurisdiction by the assessing officer under section 153C, also relied on the statement of Shri Abhinandan Lodha recorded under section 132(4), wherein the latter had made a voluntary disclosure of Rs.110.25 lacs (on account of unaccounted cash received in respect of sale of parking) in the hands of the assessee company for assessment year 2011- 12.

7. Per contra, the learned Authorized Representative (for short A.R) for the assessee submitted that as neither any money, bullion, jewellery or other valuable article or thing or books of account or documents ‘belonging’ to the assessee was seized during the course of the search proceedings conducted on Lodha Group (supra), therefore, the assessing officer had clearly traversed beyond the scope of jurisdiction as stood contemplated under section 153C and wrongly framed assessment under section 153A row with section 153C/143(3) in the hands of the assessee company. The learned Authorised Representative referring to the scope of the jurisdiction as stood vested with the assessing officer under section 153C, therein took us through the aforesaid pre- amended statutory provision as was available on the statute up to 30-5-2015. It was submitted by the learned Authorised Representative that a bare perusal of the pre-amended Section 153C clearly revealed that it was only where pursuant to search and seizure proceedings conducted on an assessee under section 132, that the assessing officer of the searched person is satisfied that any money, bullion, jewellery or other valuable article or thing or books of accounts or documents seized during the course of the search proceedings ‘belongs’ to a person other than the person referred to in Section 153A, that he shall after recording his satisfaction in writing hand over such ‘books of accounts’ or ‘documents’ to the assessing officer having jurisdiction over such other person. It was thus averred by the learned Authorised Representative that failing satisfaction of the aforesaid preconditions, the assessing officer of the ‘Other person’ would remain divested of his jurisdiction to proceed with and frame assessment in the latters hand. The learned Authorised Representative submitted that as during the course of the search and seizure proceedings conducted in the case of Lodha Group (supra), not only any document ‘belonging’ to the assessee company was seized, but rather the facts of the case revealed that no such document relating to or even referring to the assessee, much the less ‘belonging’ to it, was seized. The learned Authorised Representative further submitted that the assessing officer had tried to justify the assumption of jurisdiction under section 153C on the pretext that the seized documents, viz. Annexure A-4 – Page No. 107-108 which related to SCUD meeting and revealed receipt of ‘On-money’ pertaining to sale of flats/parking space, was relatable to the assessee. The learned Authorised Representative in order to disprove and dislodge the aforesaid observations of the assessing officer, therein took us through the relevant pages of the ‘Order sheet’ of the assessing officer, placed at Page No.2-5 of his ‘Paper book’ (APB) and drew our attention to the recordings by the assessing officer as on 5-3-2013 and 18-3-2013. It was submitted by the learned Authorised Representative that the assessee pursuant to the ‘Show cause’ notice received from the assessing officer had therein requested the assessing officer to demonstrate as to how the documents seized during the course of search and seizure proceedings on Lodha Group (supra), viz. Annexure A-4 – Page No. 107-108, or the contents thereof, as alleged by him, were related or pertained to the assessee company. The learned Authorised Representative therein taking us through the copy of the aforesaid seized documents, viz. Page No. 107-108 which were placed at Page No. 6-8 of APB, therein submitted that neither any part of the said seized documents contained any reference to the assessee company, nor the same were in any way found to be related or pertaining to the latter. It was further submitted before us that the assessing officer by referring to the very same seized documents, viz. Page No. 107- 108 (supra), had at Para 5 of his ‘Show cause’ notice issued to one M/s Simtools Pvt. Ltd., had referred to and therein related the said documents with the said latter concern. The learned Authorised Representative taking us through the letter dated 22-3-2013 filed by the assessee company to the ‘Show cause’ notice issued by the assessing officer (Page 9-10 of APB), therein averred that though the assessee had clearly submitted before the assessing officer that the aforesaid impugned seized documents, viz. Page 107-108 (supra) were in no way related to it, and had called upon the assessing officer to prove to the contrary, but however, the assessing officer had failed to rebut the said claim of the assessee. It was thus submitted by the learned Authorised Representative that as per the mandate of section 153C, the sine qua non for assumption of valid jurisdiction under section 153C therein indispensably required that any money, bullion, jewellery or other valuable article or thing or books of accounts or documents seized during the course of search proceedings is found to the satisfaction of the assessing officer as ‘belonging’ to a person other than the person referred to in Section 153A. In the backdrop of the aforesaid facts, it was thus submitted by the learned Authorised Representative that now when a bare perusal of the impugned incriminating seized documents, viz. Page 107-108 (supra), as had been referred to and relied upon by the assessing officer for justifying the assumption of jurisdiction under section 153C in the hands of the assessee company, were by no means found to be pertaining or even referring to the assessee company, much the less ‘belonging’ to the latter, therefore, the assessing officer had wrongly assumed jurisdiction under section 153C, which could not be sustained in the eyes of law and thus was liable to be vacated. The learned Authorised Representative in support of his aforesaid contention relied on a host of a judicial pronouncements, as under: —

(i) CIT v. Arpit land (P.) Ltd. (2017) 393 ITR 276 (Bom.).

(ii) CIT v. Sinhgad Technical Education Society (2015) 235 Taxman 163 : 378 ITR 84 (Bom.).

(iii) Pepsico India Holdings (P.) Ltd. v. Asstt. CIT (2015) 228 Taxman 116 : 370 ITR 295 (Delhi).

(iv) Vijaybhai N. Chandrani v. Asstt. CIT (2011) 333 ITR 436 (Guj.).

(v) Megmani Organics Ltd. v. Dy. CIT (2010) 129 TTJ 255 (Ahd.).

8. The learned Authorised Representative further submitted that the assessing officer in his attempt to justify the validity of the jurisdiction assumed by him under section 153C in the case of the assessee, had therein referred to and taken support of the statement of Shri Abhinandan Lodha recorded under section 132(4) during the course of search and seizure proceedings conducted in the case of Lodha group (supra), wherein a disclosure of Rs.110.25 lacs was made by him as regards sale of parking space in the hands of the assessee company for assessment year 2011-12. The learned Authorised Representative submitted that as per the settled position of law, the assumption of jurisdiction under section 153C requires that a ‘document’ belonging to a person other than the person referred to a Section 153A is seized during the course of the search proceedings, and as a ‘Statement’ recorded during the course of search proceedings cannot be equated with a ‘seized document’, therefore, the reliance placed by the assessing officer on the statement of Shri Abhinandan Lodha (supra) in his attempt to justify the validity of assumption of jurisdiction under section 153C in the case of the assessee company, was highly misplaced. The learned Authorised Representative in order to drive home his aforesaid contention therein took support of the judgment of the Hon’ble High Court of Delhi in the case of CIT v. Rajpal Bhatia (2011) 202 Taxman 140 (Mag.) : 333 ITR 315 (Delhi), wherein the Hon’ble High Court by referring to the pari materia provisions contained in Section 158BD, had therein observed that the statement of a person subjected to search proceedings under section 132 could not be construed as a ‘document’ seized during the course of the search proceedings. The learned Authorised Representative further in support of his aforesaid contention relied on the order of the ITAT, Jodhpur Bench, in the case of Chitra Devi v. Asstt. CIT (2002) 77 TTJ 640. Alternatively, it was submitted by the learned Authorised Representative that as the disclosure of additional income of Rs. 110.25 lacs made in the hands of the assessee company by Sh. Abhinandan Lodha (supra) in his statement recorded under section 132(4) during the course of search and seizure proceedings conducted in the case of Lodha group (supra), was in respect of assessment year 2011-12 and did not pertain to any of the years in respect of which jurisdiction had been assumed by the assessing officer under 153C in the case of the assessee company, therefore, the same on the said count also would not in any way go to validate the assumption of jurisdiction by the assessing officer under section 153C. Thus in the backdrop of the aforesaid submissions it was averred by the learned Authorised Representative that as no ‘document’ pertaining to or referring to the assessee company, much the less ‘belonging’ to the latter was seized during the course of the search proceedings, therefore, the assessing officer had transgressed the scope of his jurisdiction under section 153C and had wrongly framed assessment under section 153A row with section 153C/143(3) in the hands of the assessee company. It was submitted by the learned Authorised Representative that the Commissioner (Appeals) after thoroughly deliberating on the facts of the case in light of the settled position of law duly appreciated the absence of compliance of the preconditions for valid assumption of jurisdiction under section 153C by the assessing officer, and had thus rightly struck down the assessment framed by the assessing officer The learned Authorised Representative thus averred that as the appeal of the revenue was devoid of any force, therefore, the same was liable to be dismissed.

9. We have heard the Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record. We are of the considered view that before adverting to and adjudicating the validity of the assumption of jurisdiction by the assessing officer under section 153C in the case of the assessee company, it would be relevant to refer to the relevant extract of the pre-amended Sec. 153C, as was applicable in the case of the assessee, and read as under: —

“Section 153C. (1) 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 than 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.”.

Thus a bare perusal of the aforesaid statutory provision reveals beyond any scope of doubt that up to 30-5-2015, the requirement as per the mandate of law for the purpose of assumption of jurisdiction under section 153C was that the assessing officer of the person searched should be satisfied that money, bullion, jewellery or other valuable article or thing or books of accounts or documents seized ‘belonged’ to a person other than the person referred to Section 153A. We find that the scope of the aforesaid statutory provision in light of the conscious, purposive and intentional usage of the term ‘belongs’ or ‘belong to’ in respect of a ‘documents’, therein excluded from its scope and gamut such seized documents, which though were found to pertain or relatable to such ‘Other person’, but however not found to be ‘belonging’ to the latter. The legislature therein realizing the fact that the usage of the aforesaid terms seriously jeopardised the assumption of jurisdiction by the assessing officer in a case where any ‘books of accounts’ or ‘documents’ which though pertained to or any information contained therein related to such other person, but were not found to be ‘belonging’ to him, thus, vide an amendment made available on the statute by the Finance Act, 2015, had with effect from 1-6-2015 dispensed with the terms ‘belongs’ or ‘belong to’, in respect of the ‘books of accounts’ or ‘documents’ seized during the course of search proceedings, and therein substituted the same by clause (b) of Section 153C(1), which therein takes within its sweep any ‘books of accounts’ or ‘documents’ which pertain or pertains to or any information contained therein, relates to such other person. The relevant extract of the memorandum explaining the aforesaid amendment to section 153C, as had been made available on the statute vide the Finance Act, 2015, is reproduced as under: —

“Disputes have arisen as to the interpretation of the words “belongs to” in respect of a document as for instance when a given document seized from a person is a copy of the original document. Accordingly it is proposed to amend the aforesaid section to provide that 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 belongs to, or any books of account or documents seized or requisitioned pertain to, or any information contained therein, relates to any person, other than 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 assessing officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A”.

That as the aforesaid amendment to Section 153C is not retrospective in nature and is applicable only with effect from 1-6-2015, therefore, the case of the present assessee company would be regulated by the pre- amended provisions as were available on the statute till 30-5-2015. We find that our aforesaid observations stands fortified by the judgment of the Hon’ble High Court of Bombay in the case Arpit Land (P.) Ltd. (supra), wherein the Hon’ble High Court had held as under: —

“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 document which formed the basis of initiation of proceedings against the respondent assessee’s do not belong to it. This finding of fact has not been shown to us to be incorrect. Further, the impugned order placed reliance upon a decision of Gujarat High Court in Vjaybhai N. Chandrani v. Asstt. CIT (2011) 333 ITR 436 which records that the condition precedent for issuing notice under Section 153C of the Act is that the document found during search proceedings should belong to assessee to whom notice is issued under Section 153C of the Act. It was fairly pointed out to us by Mr. Mistry, the learned Senior Counsel for the respondent-assessee that the above decision was reversed by the Supreme Court in CIT v. Vijaybhai N. Chandrani (2013) 357 ITR 713 : 217 Taxman 138. However, we find that the Apex Court reversed the view of Gujarat High Court on the ground that efficacious alternative remedy was available to the petitioner to raise its objections before the authorities under the Act. Therefore, the Gujarat High Court should not have exercised its extra ordinary writ jurisdiction to entertain the petition. However, the Apex Court also clarified that it was not expressing any opinion of the correctness or otherwise of construction placed by the High Court on Section 153C of the Act. The Revenue has not pointed out any reason why the construction put on Section 153C of the Act by Gujarat High Court is not correct/appropriate. We find that in any case our Court has also taken a similar view in CIT v. Sinhgad Technical Education Society (2015) 378 ITR 84 : 235 Taxman 163 (Bom.) and refused to entertain Revenue’s appeal”.

10. We have further perused the ‘Satisfaction note’ of the assessing officer, as well as the seized documents, viz. Page No. 107-108 (supra) which had been referred to by the assessing officer to justify the assumption of jurisdiction under section 153C in the case of the assessee company. We find that a bare perusal of the aforesaid seized documents viz. Page No. 107-108 (supra) does neither make any reference of the assessee company, nor of any transaction entered into by the latter, which could go to justify the assumption of jurisdiction by the assessing officer under section 153C. We are of the considered view that in the absence of any ‘document’ belonging to the assessee having been seized during the course of search proceedings in the case of Lodha Group (Supra), the assumption of jurisdiction by the assessing officer under section 153C by referring to the aforesaid seized documents, viz. Page No. 107-108 (supra), is highly misplaced. We further find ourselves to be in agreement with the learned Authorised Representative that despite specific requests made by the assessee vide his reply dated 22-3-2013 filed in response to the ‘Show cause’ notice issued by the assessing officer, therein calling upon the latter to explain as to how the incriminating documents, viz. Page No. 107-108 (supra) were alleged to be related to the assessee company, no reply had been furnished by the assessing officer We further find that the contention of the assessee raised before the assessing officer that the same seized documents, viz. Page No. 107-108 (supra) had been referred to and related by him in Para no. 5 of his ‘Show cause’ notice issued to M/s. Simtools Pvt. Ltd. (supra), had also remained uncontroverted by the assessing officer We are of the considered view that as no reference of the projects undertaken by the assessee company, viz. ‘Grandezza’ and ‘Supremes’ finds any mention in the aforesaid seized documents, viz. Page No. 107-108, nor any reference of the assessee company is found therein, therefore, it could safely be concluded that the requisite conditions for assumption of jurisdiction under section 153C had not been satisfied.

11. We further find that the reliance placed by the learned Departmental Representative on the judgments of the Hon’ble High Court Delhi in the case of Super Malls (P.) Ltd. (supra), and SSP Aviation Ltd. (supra), are found to be distinguishable on facts. We find that while for in the case of M/s. Super Malls (P.) Ltd. (supra) it had emerged that the contents of the documents seized during the course of the search proceedings conducted on the ‘director’ of the assessee company were in context of the cash receipts pertaining to the sale of shops and offices of the assessee, in the backdrop of which factual position the Hon’ble High Court had concluded that the Tribunal by adopting a hyper technical approach had erred in dislodging the duly substantiated satisfaction of the assessing officer that the seized documents in view of what was contained or brought out on a fair reading of their contents, belonged to the assessee. That similarly in the case of SSP Aviation Ltd. (supra), the assessing officer by referring to the contents of the seized documents was satisfied that those belonged to the assessee, had thus forwarded the same to the assessing officer having jurisdiction over the letters case. We find that unlike the facts involved in the aforementioned cases, in the case of the present assessee company, as observed by us at length hereinabove, as neither the seized documents referred to by the assessing officer, viz. Page No. 107-108 (supra) makes any reference to the transactions of the assessee, nor its name emerges in any part of the same, therefore, the facts involved in the case of the assessee company are clearly distinguishable as in comparison to those involved in the aforesaid case laws relied upon by the learned Departmental Representative.

12. We further find ourselves to be in agreement with the learned Authorised Representative that the ‘Statement’ of Sh. Abhinandan Lodha (supra) recorded under section 132(4) in the course of search and seizure proceedings conducted in the case of Lodha Group (supra) cannot be construed as a ‘seized document’, therefore, the reliance placed by the assessing officer on the same to justify the validity of jurisdiction assumed under section 153C in the hands of the assessee company, cannot be accepted. We are further of the considered view that even otherwise as the disclosure of additional income of Rs. 110.25 lacs made by Sh. Abhinandan Lodha (supra) in his statement recorded under section 132(4), in the hands of the assessee company is relatable to assessment year 2011-12, and does not pertain to any of the years in respect of which jurisdiction had been assumed by the assessing officer under 153C in the case of the assessee company, therefore, the same on the said count also shall in no way go to confer validity to the assumption of jurisdiction by the assessing officer under section 153C.

13. We thus in light of our aforesaid observations are of the considered view that the assessing officer had clearly traversed beyond the scope of his jurisdiction under section 153C and therein proceeded with and framed assessment under section 153A row with section 153C/143(3) in the hands of the assessee company. We thus finding no infirmity in the order of the Commissioner (Appeals), therefore, uphold the same and dismiss the appeal of the revenue.

14. The appeal of the revenue for assessment year 2005-06, marked as ITA No. 4055 /Mum/2015 is dismissed.

A.Y. 2006-07 to assessment year 2010-11

ITA(s) No. 4056 to 4060/Mum/2015

15. We find that in the aforesaid respective years also the Commissioner (Appeals) by way of his consolidate order, dated 24-4-2015, had therein struck down the respective assessments by holding that the assessing officer in the absence of valid jurisdiction under section 153C had therein proceeded with and framed assessments under section 153A row with section 153C/143(3) in the hands of the assessee company. Thus, in the backdrop of the aforesaid factual position, our observations recorded while disposing of appeal of the revenue for assessment year 2005-06, marked as ITA No. 4055/Mum/2015, shall apply mutatis mutandis in the aforementioned respective appeals of the department for assessment years 2006-07 to 2010-11, marked as ITA(s) Nos. 4056-4060/Mum/2015, respectively. We thus in terms of our observations recorded while disposing of the appeal of the revenue for assessment year 2005-06, marked as ITA No. 4055/Mum/2015, therefore dismiss the aforesaid appeals filed by the revenue for assessment years 2006-07 to 2010-11.

16. The appeals of the revenue for assessment year 2005-06 to 2010-11, marked as ITA No. 4055 to 4060/Mum/2015 are dismissed.

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Category : Income Tax (25503)
Type : Judiciary (10254)
Tags : ITAT Judgments (4610) Section 153C (26)

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