Case Law Details
ACIT Vs Soniz Procon (P.) Ltd. (ITAT Ahmedabad)
ITAT Ahmedabad held that invocation of proceedings u/s 153C of the Income Tax Act unsustainable as AO has not put on record that material seized during the course of third party search belongs to the assessee.
Facts- The assessee is engaged in the business of development and construction of residential and commercial complexes. The assessee follows Project completion method of accounting and filed its Returns of Income of the various projects undertaken by the assessee.
There was search action u/s. 132 of the Act, carried out in the case of Shri Sanket Jitendrabhai Shah, wherein MS Axel file named “76 flat list” was found. As per the AO, the above sheet included the details of 76 flats in Vibrant Homes Project carried out by the assessee. Parallelly there was Survey action u/s. 133A of the I.T. Act was conducted in the case of the assessee and no discrepancy was found neither in the books of accounts nor unaccounted cash was found in the business premises of the assessee but certain loose papers were impounded during the course of survey.
Subsequently, on the basis of the search proceedings carried out in the case of Shri Sanket Jitendrabhai Shah, proceedings u/s. 153C of the Act were initiated in the case of the assessee and additions on account of unaccounted income u/s. 69A of the Act by way of suppressed on-money receipts, treating the same as unexplained cash credits were made in the all the assessment years and demanding tax thereon.
Based on the submissions, CIT(A) deleted the addition. Being aggrieved, revenue has preferred the present appeal.
Conclusion- In this case, the A.O. has not put on record that any material seized during the course of search does belong to the assessee. However seized materials related to other third party. Therefore in our considered view, the invocation of proceedings u/s. 153C is against the provisions of law.
Hon’ble High Court, in the case of Aranav Anandgopal Chakravartty, Proprietor of M/s Ocean Valves Mfg. Co, has clearly arrived at the conclusion that the post amended section would be applicable prospective only on the search conducted on or after 1.6.2015. Hence, prior to the amendment the material found from the premises of the searched person, should be belonging to the person in whose case the material is to be used by drawing satisfaction and for issuance of notice u/s. 153C.
FULL TEXT OF THE ORDER OF ITAT Ahmedabad
These five appeals filed are by the Revenue as against the Common Appellate Order dated 10.08.2021 passed by the Ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad arising out of the assessment orders passed under section 153C(1)(b) r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for the Assessment Years (A.Ys) 2011-12 to 2014-15 and assessment order passed under section 143(3) for the Assessment Year 2015-16 respectively. The Cross Objections are filed by the Assessee against the above five Revenue appeals. Since the issues involved in all these appeals are identical, except to the difference in figures of addition in each assessment year, therefore the same are disposed of by this common order.
2. IT[SS]A No.177/Ahd/2021 relating to the Asst. Year 2011-12 is taken as the lead case. Brief facts of the case is the assessee is engaged in the business of development and construction of residential and commercial complexes. The assessee follows Project completion method of accounting and filed its Returns of Income of the various projects undertaken by the assessee. There was search action under section 132 of the Act, carried out in the case of Shri Sanket Jitendrabhai Shah on 04.12.2014, wherein MS Axel file named “76 flat list” was found. As per the AO, the above sheet included the details of 76 flats in Vibrant Homes Project carried out by the assessee. Parallelly there was Survey action u/s. 133A of the I.T. Act was conducted in the case of the assessee and no discrepancy was found neither in the books of accounts nor unaccounted cash was found in the business premises of the assessee but certain loose papers were impounded during the course of survey.
3. Subsequently, on the basis of the search proceedings carried out in the case of Shri Sanket Jitendrabhai Shah, proceedings u/s. 153C of the Act were initiated in the case of the assessee and additions on account of unaccounted income u/s. 69A of the Act by way of suppressed on-money receipts, treating the same as unexplained cash credits were made in the all the assessment years and demanding tax thereon.
3.1. Aggrieved against the assessment orders, the assessee filed appeals before the Ld. Commissioner of Income Tax [Appeals]. The assessee has raised objections to the proceedings under section 153C of the Act with detailed submissions, inter alia, contending that on the basis of the excel sheet data from the computer of the searched person, the Assessing Officer could not have initiated proceedings against the assessee under section 153C of the Act in as much as the condition precedent for invoking section 153C of the Act as it stood on the date of the search, viz. 04-12-2014 that the Assessing Officer should be 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” the person other than the searched person was not satisfied.
3.2. In present case, the search action was conducted in the case of Shri Sanket Jitendrabhai Shah on 04.12.2014 i.e. date prior to 01- 06-2015 [pre amended section of 153C]. Therefore, on the date of the search, the Assessing Officer of the ‘person searched’ could only have recorded satisfaction to the effect that the seized material “belongs or belong to” the other person. Thus the assessee has submitted in his case, the satisfaction note has been recorded on 14.10.2016 by the AO and the relevant extract of the same reads is as under:
“12, In view of the above facts, I am satisfied that the above mentioned documents seized from the residence of Shri Sanket Jitendrabhai Shah (Vora) and during the course of search at B-406, Wall Street-11, EHisbridge, Ahmedabad, pertain/pertains to or the above information discussed in paras 6 to 8 relates to the assessee M/s, Soniz Procon Private Limited for the assessment year 2009-10 to 2014-15. Since the assessee being other than the person referred to in Section 153A of the Act, I have satisfaction to proceed against the assessee M/s. Soniz Procon Private Limited as per the provisions of Section 153C of the I.T. Act, 1961 as it has bearing on the determination of the total income for the assessment years. Accordingly, the assessment proceedings in the case of the assessee for the assessment years 2009-10 to 2014-15 is hereby initiated u/s. 153C of the Act and notices u/s. 153C for the assessment years 2009-10 to 2014-15 is being issued.”
3.3. The assessee also submitted the satisfaction note recorded by the AO on 14-10-2016 in the case of searched person Shri Sanket Jitendrabhai Shah and the relevant extract of the satisfaction note reads is as under:
“11. In view of the above facts, I am satisfied that the above mentioned documents seized from the residence of Shri Sanket Jitendrabhai Shah (Vora) and during the course of search at B-406, Wall Street-11, Ellisbridge, Ahmedabad, pertains to or the above information discussed in paras 6 to 8 relates to the assessee M/s. Soniz Procon Private Limited for the assessment year 2009-10 to 2014-15. Since the assessee being other than the person referred to in Section 153A of the Act, I have satisfaction. to proceed against the assessee M/s. Soniz Procon Private Limited as per the provisions of Section 153C of the I.T. Act, 1961 as it has bearing on the determination of the total income for the assessment years 2009-10 to 2014-15. Therefore, this is a fit case for initiation of proceedings u/s. 153C of the Act.”
3.4. It clear from the satisfaction note recorded by the AO of the searched person and also that of the assessee that the seized material found in the case of search on 4.12.2014 at the residence of Shri Sanket Jitendrabhai Shah “pertain or relates to the assessee” for the Asst. Years 2009-10 to 2014-15. The assessee emphasized that the material found at the place of Shri Sanket Jitendrabhai Shah was “not belonging to the assessee” but pertaining/relating to the assessee, which is not in accordance to the provisions of section 153C of the Act prevailing on the date of search and relied upon the jurisdictional judgement of the Hon’ble Gujarat High Court and other judgements.
3.5. The assessee submitted that the excel sheet containing the information “relating to the assessee” admittedly “did not belong to the searched person”, therefore, as on the date of the search namely 04.12.2014, the essential jurisdictional requirement to justify assumption of jurisdiction under section 153C in case of the assessee did not exist. It was only from 01-06-2015 when the amended provisions of section 153C came into force that the Assessing Officer of the searched person could have formed the requisite belief that the books of account or documents seized or requisitioned “pertain to or the information contained therein relates to the assessee”.
3.6. Another fold of the argument of the assessee was that the seized loose sheets in the business premises of the assessee during the course of Survey u/s.133A cannot be used for framing assessment under section 153C of the Act.
4. The Ld. CIT(A) after considering the submissions of the assessee and various case laws on the jurisdictional issue deleted the additions made by the AO as follows:
“… 9.16 In 153C proceedings in case of the other person (other than the searched assessee), the addition to be made must have a live link with the seized material found from the premises of the searched assessee. Section 153A(1) of the Act has reference of search u/s. 132 of the Act and requisition of books of account etc. u/s. 132A of the Act. There is no reference of section 133A of the Act i.e. survey. Similarly, from the provision of section 153C(1) of the Act as reproduced hereinabove, it can be observed that it has reference of the words “seized” and “requisitioned” i.e. reference of section 132 and 132A of the Act. Thus, for the purpose of section 153C of the Act also, there is no reference to section 133A of the Act i.e. survey.
9.17 In view of the above, I am of the considered view that in the scrutiny assessment u/s. 153C r.w.s. 153A of the Act, no addition can be made in respect of the material impounded during the course of survey u/s. 133A of the Act carried out in case of the appellant company. It has no live link or nexus with the seized material mentioned in the satisfaction note of the AO to issue the notice u/s. 153C of the Act. Accordingly, the addition made on the basis of impounded material u/s. 133A of the Act is held to be illegal and contrary to the provisions of section 153C r.w.s. 153A of the Act and therefore the same deserves to be deleted.
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9.32 In view of the above discussion, the legal grounds taken by the appellant is found substance objecting to the initiation of the proceedings u/s. 153C of IT Act not in accordance with the provisions of law. The initiation of proceedings in the years under consideration is without any incriminating documents found. The details of the documents found during the course of survey could not be utilized for making the assessment u/s. 153C of the I.T. Act. Moreover, in AY 2015-16, the AO ought to have initiated the proceedings u/s. 153C rather than to complete the assessment u/s. 143(3) of the I.T. Act. The other legal aspects taken by the appellant also challenges the initiation of the proceedings u/s. 153C of IT Act and consequently the assessment completed by the AO. Therefore, in view of the facts on record, submission and also respectfully following the judgments of Hon’ble Courts discussed briefly above, the proceedings initiated u/s.153C is found not in accordance with the provisions of law and consequently the addition made by the AO in the assessment completed is legally not tenable and hence the addition are deleted.
9.33 Without prejudice to the above, it has been noticed that the AO has made the addition of the on money receipts in various years on the basis of year of last payment received through cheques. This proposition does not have legal sanctity in view of the decisions/judgement of Hon’ble Courts including the following. whereby it has been held that the on money has to be taxed in the year in which the sale deed was executed or sales have been registered.
DCIT vs. Ohm Developers in ITA No. 314/Ahd/2002 dated 08.05.2015 D. Construction vs ITO in ITA No, 2735/Ahd/2010 dated 08.04.2011
Thus the taxation of the income from the On-Money in the year of receipt is against the proposition as laid down by the jurisdictional Tribunal in the orders above.
9.34 It is also worth here to mention that the addition on merits require no separate adjudication since on legal grounds, the addition have been found to be unjustified in all the assessment years and hence deleted. Therefore, no decision on merits is given. In the result, the grounds of appeal and additional grounds of appeal are partly allowed.
Decision on grounds of appeal of Asst. Yrs.2012-13, 2013-14, 2014-15 & 2015-16.
9.35 Since all the above grounds of appeal are identically involved in the appeal for A.Y.2012-13, A.Y. 2013-14, A.Y. 2014-15 & 2015-16 also, and the facts are similar in these years, hence following the decision taken in A.Y.2011-12 as per the preceding paras, the similar grounds of appeal taken in A.Y.2012-13, A.Y. 2013-14, A.Y. 2014-15 & 2015-16, are also decided accordingly. In other words, on legal grounds the appellant gets the relief. The other grounds on merit did not require separate adjudication.
10. With regard to grounds of appeal No. 2 & 4, no separate adjudication is required to be made since on legal grounds, the addition have been found justified in all the assessment years and hence deleted. This reason/decision is equally applicable in the appeal of other assessment years also.
11. Ground of appeal No.7 is general in nature and no specific submission has been filed by the appellant in this regard. Hence the ground of appeal is dismissed.”
5. Aggrieved against the above Common Appellate Order the Revenue is in appeal before us raising the following Grounds of Appeal:
1. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in holding that the details of the documents found during the course of survey could not be utilized for making the assessment u/s. 153C of the I.T. Act., without appreciating the fact that the case of the assessee company was re-opened on the basis of MS excel File named “76 flat list” containing the details of 76 flats in Vibrant Homes Scheme of M/s. Soniz Procon Pvt. Ltd., found and seized from the residential premises of Sanket J. Shah who was covered u/s. 132 of the IT Act.
2. On the facts and in the circumstances of the case and in law, Ld. CIT(A) erred in deleting the addition of Rs.4,68,85,100/- made u/s 69A on account of unaccounted on-money receipts, on legal grounds, without going into the merits of the issue, despite having sufficient evidences found and sized during the course of search from residential premises of Sanket J. Shah, which were subsequently corroborated with the impounded material found and impounded as Annexure A/1 (pages 1 to 93) and Annexure A/2 (pages 1 to 44) during the course of survey action carried out in the case of assessee company.
3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) ought to have upheld the order of the A.O.
4. It is, therefore, prayed that the order of the Ld. CIT(A) be set aside and that of the A.O. be restored to the above extent.
6. The Grounds of Appeal raised by the Assessee in the Cross Objection are as under:
1. The Ld. A.O has erred in law and/or facts in making the assessment without service of notice U/s 143 (2) of the Act hence order passed by the Ld. A.O. is bad and illegal.
2. The Ld. A.O has not assumed valid jurisdiction U/S 153C of the Act hence order passed U/s 143(3) r.w.s 153C(1)(b) of the Act is bad, illegal and void.
3. The order is bad and illegal as no valid and specific show cause notice was given hence, the same is against provisions of principle of natural justice.
4. The Ld. A.O. has erred in law and on facts in making addition on presumption basis without any material evidence on records in completed assessment case of completed assessment.
5. The Ld. A.O erred in law and or facts in making addition of alleged receipts of on money from the members without any material and corroborative evidence on record and hence addition U/s 69A of the Act of Rs. 4,68,85,100/- is required to deleted.
6. The approval granted y JCIT u/s. 153D of the Act is null and void as he has granted approval u/s 153D of the Act in a mechanical way and without application of mind.
7. We have heard rival parties and perused the material filed before us including the Paper Book filed by the assessee. The moot question that arise for consideration in the present case is what is the relevant date from which the amended provisions of section 153C would be applicable. No doubt, the amended provisions has been expressly brought into force with effect from 01.06.2015. However the search action in the case of Shri Sanket Jitendrabhai Shah (Vora) was held on 04.12.2014 which is prior to 01.06.2015. Section 153C was amended by the Finance Act, 2015 w.e.f. 01.06.2015 as follows:
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,-
(a) Any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
(b) Any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, related to,
7.1. The pre-amended provisions reads as follows:
“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 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.”
7.2. Hence the provisions of law, as existing on the date of search namely 04.12.2014 in this case is to be followed. Therefore the satisfaction note recorded by the Assessing Officer on 14.10.2016 (which is extracted in Para 3.2 of this order), invoking the amended provisions of section 153C namely “various documents were seized which “relates to” and the information contained therein “pertains” to the assessee is not correct in law. Even as per the pre-amended provisions of Section 153C, the Assessing Officer has to record satisfaction to the effect that seized material “belongs” or “belongs to” other person. In this case, the A.O. has not put on record that any material seized during the course of search does belong to the assessee. However seized materials related to other third party. Therefore in our considered view, the invocation of proceedings u/s. 153C is against the provisions of law.
7.3. In this connection, the Hon’ble Gujarat High court in the case of Anil Kumar Gopikishan Agrawal vs. Assistant Commissioner of Income-tax, Circle 3(2), Ahmedabad [2019] 106 taxmann.com 137 (Gujarat) wherein it was held as under.
“Section 153C is a machinery provision which is inserted in the statute book for the purpose of carrying out assessments of a person other than the person searched under sections 132 and 132A. The moot question that arises for consideration in the present case is as to what is relevant date from which the amended provisions of section 153C would be applicable. While the amended provisions have been expressly brought into force with effect from 1-6-2015, the controversy in the present case arises because the searches in all these cases had been conducted prior to 1-6-2015, whereas the proceedings under section 153C have been initiated after that date and it is in this backdrop that the validity of the impugned notices has been called in question. It is the case of the petitioners that the proceedings under section 153C are triggered by the search, and hence the provisions of law as existing on the date of the search have to be followed, while it is the case of the respondents that the provisions of law as existing on the date of recording of satisfaction by the Assessing Officer of the person searched and the date of issuance of notice under section 153C have to be followed. [Para 19.4]
5.13 While it is true that section 153C is also a machinery provision for assessment of income of a person other than the person searched, in the opinion of this court, this is not a case where by virtue of the amendment, there is merely a change in the procedural provisions affecting the assessees who were covered by the unamended provision. By the amendment, a new class of assessees are sought to be brought within the sweep of section 153C, which affects the substantive rights of the assessees and cannot be said to be a mere change in the procedure. Since the amendment expands the scope of section 153C by bringing in an assessee if books of account or documents pertaining to him or containing information relating to him have been seized during the course of search, within the fold of that section, this question assumes significance, inasmuch as in the facts of the present case, as on the date of search, it was only if such material belonged to a person other than the searched person, that the Assessing Officer of the searched person could record such satisfaction and forward the material to the Assessing Officer of such other person. However, subsequent to the date of search, the amendment has been brought into force and based on the amendment, the petitioners who were not included within the ambit of section 153C as on the date of the search, are now sought to be brought within its fold on the ground that the satisfaction note and notice under section 153C have been issued after the amendment came into force. Therefore, this case does not relate to the interpretation of the provisions of any of the sections, but relates to the stage at which the amended section 153C can be made applicable, as to whether it relates to the date of search; or the date of recording of satisfaction by the Assessing Officer of the searched person; or the date of recording of satisfaction by the Assessing Officer of the other person; or the date of issuance of notice under section 153C. [Para 19.8]
5.14 In the facts of the present case, the search was conducted in the cases of searched person on 4.12.2014, date prior to 1-6-2015. Therefore, on the date of the search, the Assessing Officer of the person searched could only have recorded satisfaction to the effect that the seized material belongs or belong to the other person. In the present case, the MS Exel file containing the information relating to the appellant admittedly did not belong to them, therefore, as on the date of the search, the essential jurisdictional requirement to justify assumption of jurisdiction under section 153C in case of the petitioners, did not exist. It was only on 1-6-2015 when the amended provisions came into force that the Assessing Officer of the searched person could have formed the requisite belief that the books of account or documents seized or requisitioned pertain to or the information contained therein relates to the petitioners. [Para 19.91
5.15 In this backdrop, to test the stage of applicability of the amended provisions, a hypothetical example may be taken. The search is carried out in the case of HN Safal group on 4-9-2013. If the Assessing Officer of the searched person had recorded satisfaction that some of the seized/requisitioned material belongs to a person other than the searched person and forwarded the material to the Assessing Officer of the other person and, had issued notice under section 153C prior to the coming into force of the amended provision. The notice under section 153C was challenged before the appropriate forum on the ground that the seized material does not belong to such other person and such issue was decided in favour of such person on a finding that the seized material does not belong to the other person. Thereafter, in view of the amendment in section 153C (1), since the books of account or documents did not belong to the other person but did pertain to him or the information contained therein related to him, can the Assessing Officer of the searched person once again record satisfaction as contemplated under the amended provision and forward the material to the Assessing Officer of such other person. The answer would be an emphatic ‘no’ as the Assessing Officer of the searched person after recording the earlier satisfaction would have already forwarded the material to the Assessing Officer having jurisdiction over the other person, therefore, there would be no question of his again forming a satisfaction as required under the amended provisions of section 153C. [Para 19.101
5.16 If a date other than the date of search is taken to be the relevant date for the purpose of recording satisfaction one way or the other, it would result in an anomalous situation where in some cases, because the notices under section 153C were issued prior to the amendment, they would be set aside on the ground that the books of account or documents seized or requisition did not belong to the other person though the same pertained to or the information contained therein related to such person, whereas in other cases arising out of the same search proceedings, merely because the notices are issued after the amendment, the same I would be considered to be valid as the books of account or documents seized or requisitioned pertain to or the information contained therein relate to the other person. It could not have been the intention of the Legislature to deal with two sets of identically situated persons differently. merely because in one case the Assessing Officer of the searched person records satisfaction as required under section 153C prior to the coming into force of the amended provisions and in any another case after the coming into force of the amended provisions. [Para 19.11]
It is the date of search that has been considered to be the relevant date for the purpose of applying the amended provisions of section 153C(1). [Para 19.4]
5.17 The trigger for initiating action whether under section 153A or 153C is the search under section 132 or requisition under section 132A and the statutory provisions as existing on the date of the search would be applicable. The mere fact that there is no limitation for the Assessing Officer of the searched person to record satisfaction will not change the trigger point, namely, the date of the search. The satisfaction of the Assessing Officer of the searched person would be based on the material seized during the course of the search or requisition and not the assessment made in the case of the searched person, though he may notice such fact during the course of assessment proceedings. Therefore, whether the satisfaction is recorded immediately after the search, after initiation of proceedings under section 153A or after assessment in framed under section 153A in the case of the searched person, the trigger point remains the same, viz., the search and, therefore, the statutory provision as prevailing on that day would be applicable. While it is true that sections 153A and 153C are machinery provisions, but the same cannot be made applicable retrospectively, when the amendment has expressly been given prospective effect. Besides, though such provisions are machinery provisions, the amendment brings into its fold persons who are otherwise not covered by the said provisions and therefore, affects the substantive rights of such person. [Para 19.15]
5.18 The test would be whether at the first point of time when satisfaction could have been recorded by the Assessing Officer of the person searched, could he have recorded the satisfaction as envisaged under the amended provision. [Para 19.17]
5.19 The CBDT vide Circular No. 24/2015 dated 31-12-2015 has accepted that these guidelines would apply to proceedings under section 153C. Applying these guidelines, it may be ascertained as to whether at the time of or along with the initiation of proceedings against the searched person under section 153A, the Assessing Officer of the searched person could have recorded the requisite satisfaction that the books of account or documents seized or requisitioned pertain to or any information contained therein relates to the other person. If no, it is not permissible for him to record such satisfaction at any other stage merely because at a later date the statutory provision came to be amended. [Para 19.18]
5.20 It may be pertinent to note that vide CBDT Circular No. 2/2018 dated 15-2-2018, it has been clarified that the amended provisions of section 153A shall apply where search under section 132 is initiated or requisition under section 132A is made on or after 1-4-2017. It is further stated therein that section 153C has also been amended to provide a reference to the relevant assessment year or years as referred to in section 153A. It is also stated therein that thus, the amendment will take effect from 1-42017. Therefore, even the CBDT, in the context of the amended provisions of section 153A, has clarified that it would apply when search or requisition is made after the date of the amendment. Evidently, therefore, even the amended provisions of section 153C would apply when search or requisition is made after the amendment. [Para 19.19]
5.12 Thus, when the Legislature thought it fit to make the amendment in section 153B relating to time limit of assessment under section 153A retrospective from a particular date, it provided that such retrospectivity would relate to cases where the search is initiated or books of account documents or other assets are requisitioned, from such date. Thus, even the Legislature has considered the initiation of search or making of requisition as the trigger point for applying the provisions of section 1538 to assessment under section 153. Under section 153C also, ultimately, assessment or re-assessment is required to be made in accordance with section 153A. Thus, when the amended provisions of section 153C (1) have been brought into force with effect from 1-6-2015, it has to be construed that such amended provisions would apply to a search initiated under section 132 or in relation to books of account, other documents or any assets requisitioned under section 132A after 31-5-2015 Consequently, in relation to searches carried out till 31-5-2015, it was not permissible for the Assessing Officer to assume jurisdiction under section 153C as amended with effect from 1-6-2015. [Para 19.21]”
7.4. This decision of the Jurisdictional High Court has also been followed in the case of Aranav Anandgopal Chakravartty, Proprietor of M/s Ocean Valves Mfg. Co, in Special Civil Application No. 19647 of 2018 wherein the search of M/s. Venus Group on 13.03.2015 has been covered and the 153C notices has been issued on 22.03.2018 and 14.08.2018. Wherein the Hon’ble High Court has clearly arrived at the conclusion that the post amended section would be applicable prospective only on the search conducted on or after 1.6.2015. Hence, prior to the amendment the material found from the premises of the searched person, should be belonging to the person in whose case the material is to be used by drawing satisfaction and for issuance of notice u/s. 153C.
7.5. This ratio of the above judgements of the Hon’ble Gujarat High Court has been followed by the Hon’ble Gujarat High Court in other cases also which are concluded as under:
a) Mahendrabhai Kasturchand Son Vs. ITO, SCA No.11817 of 2019 (Guj),
b) Charmy Sanket Naik Vs. ACIT, SCA No.13374 of 2019 (Guj);
c) Nita Chaitanya Shah, SCA No.14059 of 2019 (Guj); are reproduced hereunder:
“…. 6. Ultimately, the final order which came to be passed by the Court reads as under:
“In the light of the above discussion, the petitions succeed, and are accordingly, allowed. The impugned notices issued under section 153C of the Income Tax Act, 1961 in each of the petitions are hereby quashed and set aside. In cases where the assessment orders are subject matter of challenge, the impugned assessment orders are hereby quashed and set aside on the ground that the very initiation of proceedings under section 153C of the Income Tax Act, 1961 was without jurisdiction. Rule is made absolute accordingly in each of the petitions, with no order as to cost.”
7. The issue involved in the present petition is identical. We propose to apply the very same principles of law as laid down and explained by the coordinate bench in the Special Civil Application No.12825 of 2018 and allied matters to the facts of the present case.
8. In view of the above, the petition is allowed. The impugned notice at Annexure ‘A’ is hereby quashed and set aside.
9. Consequently, if any Assessment Order has been passed under Section 153C of the Income Tax Act, 1961, the same is also quashed and set aside. Rule is made absolute to the aforesaid extent.
8. Respectfully following the above Jurisdictional High Court judgments, the grounds raised by the Revenue are devoid of merits. Thus the assessments made by the Assessing Officer invoking the amended provisions of Section 153C of the Act are legally not tenable and therefore the additions are liable to be deleted.
9. In the result, the appeal filed the Revenue are hereby dismissed. Consequently, the Cross Objections filed by the Assessee are also dismissed.
10. Thus the Revenue appeals in IT(SS)A Nos. 178, 179 & 180/Ahd/2021 and ITA No. 290/Ahd/2021 relating to the Assessment Years 2012-13 to 2015-16 are also dismissed on identical facts as decided in IT(SS)A No. 177/Ahd/2021. Similarly, the C.O. Nos. 6 to 9/Ahd/2022 filed by the Assessee are also dismissed.
11. In the result, the appeals filed by the Revenue and the Cross Objections filed by the Assessee are hereby dismissed.
Order pronounced in the open court on 28 -02-2023
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