Case Law Details
DCIT Vs Paresh K. Shah (ITAT Mumbai)
Conclusion: Since the date of initiation of search u/s 132 for the purpose of an assessment u/s 153C had to be construed as the date of receiving the books of account by the AO having jurisdiction over such other person, from the A.O. of the searched person, the period of six years was to be reckoned from the date of recording of such ‘satisfaction’, which would thus take within its sweep the period relevant to Assessment Years: 2008-2009 to 2013-2014. Accordingly, the case of assessee for the year under consideration i.e. A.Y.2007-2008 would not fall within the scope and gamut of the period for which assessment proceedings u/s153C could be framed.
Held: During the search proceedings, it was found that the concern viz. M/s Gold Sukh Safety Vaults Ltd. was making the lockers available to hawala operators who were engaged in illegal transfer of cash and the contents of the locker No.596 belonged to assessee. AO noticed that the same were the income tax and sales tax related documents of a number of concerns. On the basis of certain details gathered by AO, it came to his notice that names of number of concerns, whose documents were found from the aforesaid locker figured in the list of the accommodation entry providers published by the Sales Tax Department, Govt. of Maharashtra. AO issued a show cause letter to assessee and called upon him to explain the above mentioned hawala parties, which were engaged in the business of providing accommodation entries and were being controlled by him. It was also brought to the notice of assessee that in the absence of any plausible reply, it should be inferred that he was getting commission on such bogus transactions. Aggrieved, assessee carried the matter before the CIT(A). CIT(A) was of the view that as substantial infrastructure would have been required by the assessee for carrying on the business of an accommodation entry provider as an owner of the aforementioned 53 bogus concerns, which however was not the case, therefore, in the totality of the facts it could safely be concluded that he had rendered his services as a facilitator for the accommodation entry providers and had earned commission income therefrom. CIT(A) had taken the commission income of assessee @0.05% of the aggregate of the turnovers of the said 53 concerns during the respective years. CIT(A) upheld the view taken by the AO that assessee was engaged in the business of providing bogus accommodation entries to 3rd parties, however, he held a conviction that assessee was merely a facilitator and not the owner of the said bogus concerns. As such, the CIT(A) backed by his aforesaid conviction restricted the addition in the hands of the assessee by adopting the rate of commission @ 0.05% of the aggregate of the turnovers of the aforesaid parties during the respective years. It was held that the ‘satisfaction’ of the A.O of the assessee i.e the person other than the searched person was recorded on 15.01.2014. As such, the period of six years was to be reckoned from the date of recording of such ‘satisfaction’, which would thus take within its sweep the period relevant to Assessment Years: 2008-2009 to 2013-2014. Accordingly, the case of assessee for the year under consideration i.e. A.Y.2007-2008 would not fall within the scope and gamut of the period for which assessment proceedings u/s153C could be framed. Accordingly, AO was directed to verify the factual position as regards the date on which the books of accounts or documents or assets seized during the course of search proceedings were delivered by the AO of the searched person to the AO of the assessee i.e the person other than the searched person. Apart there from, in case the AO of the searched person and that of the assessee was the same person, then the date of recording of „satisfaction‟ by the A.O in the file of the assessee i.e the person other than the searched person, shall be taken as the relevant date for reckoning the period of six assessment years for which assessments could have been framed u/s 153C. In case, the claim of assessee that the year under consideration vis. A.Y.2007-2008 fell beyond the scope of six assessment years from the aforementioned date of recording of satisfaction or receiving of documents or assets seized or books of accounts by the AO of assessee, the assessment framed by AO should stand vacate.
FULL TEXT OF THE ITAT JUDGEMENT
The above mentioned cross appeals filed by the assessee and the revenue are directed against a common order passed by the CIT(A)-48, Mumbai, dated 16.10.2017 for the assessment years 20072008 to 2013-2014. As the issues involved in all these appeals are identical, except for in the case of A.Y 2008-08 where the assessee has also assailed by way of an additional ground of appeal the validity of the jurisdiction assumed by the A.O for framing the assessment u/s 153C r.w.s 143(3) of the Income-tax Act, 1961 (for short “I-T Act”), therefore, the said appeals are being disposed off by way of a consolidated order. For the sake of convenience, first we shall take up the appeal of the assessee for the assessment year 2007-2008 in ITA No.7374/Mum/2017. The assessee assailing the order of the CIT(A) has raised before us the following grounds of appeal :-
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