Case Law Details

Case Name : DCIT Vs Late Shri Pravinsinh N Zala (ITAT Rajkot)
Appeal Number : IT(SS)A No. 15/Rjt/2018
Date of Judgement/Order : 01/06/2020
Related Assessment Year : 2014-15
Courts : All ITAT (7310) ITAT Rajkot (27)

DCIT Vs Late Shri Pravinsinh N Zala (ITAT Rajkot)

Whether the amendment brought under the provisions of section 153C of the Act, where the word ‘belong’ was replaced with the word ‘pertain’ is applicable for the year under consideration. It was only on 1st June, 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.

In this regard we note that the search was conducted prior to the amendment i.e. 16th October 2014 but the notice was issued under section 153C of the Act subsequent to such amendment dated 29th of July 2016. Thus the controversy arises whether the provisions of prior to the amendment or subsequent to the amendment under section 153C of the Act as discussed above will be applicable in the case on hand.

From the jurisdictional High Court judgment in the case of Anil Kumar Gopikisan Agrawal vs. ACIT reported in 106 Taxman.com 137  it is transpired that the provisions of section 153C as applicable on the date of search will be applied to the proceedings initiated therein.

Thus there remains no ambiguity to the fact that the provisions of section 153C of the Act prior to the amendment therein, will be applicable in the case on hand which requires the AO to arrive at a satisfaction that the documents found from the premises of the 3rd party in the course of search belongs to the assessee. We have already explained the meaning of the word belongs in the preceding paragraph.

In view of the above, we are conscious to the fact that the seized material found from the premises of the 3rd party in the course of search does not belong to the assessee. Thus in our considered view the proceedings under section 153C of the Act, cannot be initiated. Hence, the assessee succeeds on his technical ground of appeal. Accordingly the technical ground raised by the assessee is allowed.

FULL TEXT OF THE ITAT JUDGEMENT

The captioned appeals and cross objections have been filed at the instance of the Revenue and assessee. First we take IT(SS)A No 15/RJT/2018 and CO No. 10/RJT/2018 in case of Late Shri Parvinsinh Nanubhai Zala

2. The assessee has raised the following grounds of appeal in the CO bearing No. 10/RJT/2018.

“1.0 The grounds of cross-objections mentioned hereunder are without prejudice to one another.

2.0 The ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as the “CIT(A)”] erred on facts as also in law in dismissing the ground of appeal related to the validity of notice issued u/s 153C of the Income tax Act, 1961.

2.1 The notice issued u/s 153C of the Act is bad in law and without jurisdiction and therefore the same may kindly be quashed.”

3. The Revenue has raised the following grounds of appeal bearing No. 15/RJT/2018.

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 2,55,88,999/- being on-money paid on the purchase of agricultural land.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition made on account of unexplained expenditure of Rs. 3,94,631/-.

3. The CIT(A) has erred in facts and law in giving relief to the assessee by ignoring the contents of the seized document and the original statements given by the 4 sellers, and in relying on affidavits of the sellers submitted by the assessee at a much later date.

4. The CIT(A) has erred in facts and law by giving relief to the assessee ignoring the discrepancies in the statements of the farmers pointed out by the AO regarding the inconsistency in the statements.”

4. First, we take up CO. No. 10/RJT/2018, filed by the assessee.

5. The assessee in all the grounds of appeal has challenged the validity of the assessment framed by the AO under section 153C read with section 143(3) of the Act, on the ground that there was no document found during the search which is either incriminating in nature or belonging to the assessee.

6. At the outset the learned AR before us objected on the initiation of the proceedings under section 153C of the Act, by contending that there is no name, address, phone numbers PAN, banking details or any other specific detail related to assessee was found from the seized documents. The learned AR in support of his contention drew our attention on page 21 of the paper book where the seized material was placed.

The learned AR further submitted that there may be some reference in the seized documents about the assessee but that is not sufficient to initiate the proceedings under section 153C of the Act, until and unless there is some nexuses with the assessee based on cogent materials. As such the assessee had no connection of whatsoever with the company namely M/s Amidhara Developers Pvt. Ltd. (in short ADPL) where the search was conducted. Neither the assessee nor persons closely connected with him were having any dealing of whatsoever with such company. Accordingly the documents seized from the premises of the search party does not belong to the assessee.

The learned AR also contended that the impugned seized document was made on 14th April 2014 whereas the assessee has purchased the impugned survey numbers on 18th December 2013 and 3rd February 2014. Therefore there cannot be any reference on such seized documents for the year under consideration.

7. On the other hand, the learned DR vehemently supported the order of the authorities below.

8. We have heard the rival contentions of both the parties and perused the materials available on record before us. The facts in brief as culled out from the order of the authorities below are that there was a search and seizure operation carried out at the premises of ADPL dated 16 October 2014. As a result of search various documents incriminating in nature were found including two file bearing BOOK1(1) and BOOK1(2) which were extracted from the hard disk drive of the computer of the searched person. These documents were excel sheets containing various details such as survey numbers, size (vigha), amount paid and legal status etc. On the top of excel sheet date was mention i.e. 14 April 2014. Out of various survey numbers mentioned in the excel sheet, two survey numbers bearing 1214 and 1215 were representing the lands purchased by the assessee.

The AO on verification of the sale deeds of the impugned survey numbers found that the amount mentioned therein viz a viz the amount mention in the seized document does not match. As such the amount mentioned in the seized documents was greater than the amount mentioned in the sale deeds. Accordingly he was of the view that the assessee has made investment in the impugned lands without recording the same in the books of accounts. Accordingly, the AO initiated the proceedings under section 153 C of the Act. From the preceding discussion we note certain undisputed facts as detailed under:

i. The excel sheets were found from the hard disk drive (HDD) of the company namely ADPL in the course of search conducted under section 132 of the Act.

ii. There was no direct or indirect relationship between the assessee and the searched person as discussed above.

iii. There was no name, signature, banking details, PAN of the assessee except the survey numbers registered in the name of the assessee.

iv. There was no information about the author of such seized materials. Similarly the purpose of such noting in the seized material was also not ascertainable. The searched party has also not brought anything on record such as the purpose and the author of such noting.

v. The seized document was neither written by the assessee being the purchaser nor by the seller of the impugned survey numbers.

vi. The date mentioned on the seized document was 14th April 2014 whereas the assessee has purchased the impugned lands bearing survey numbers 1214 and 1215 dated 18thDecember 2013 and 3rdFebruary 2014 i.e. much before the date mentioned in the seized document.

Now the question arises, whether the document found from the premises of the 3rd party belongs to the assessee as provided under section 153C of the Act, prior to the amendment therein which is effective from 1stJune 2015. The provisions of section 153C (1) of the Act, prior to the amendment reads as under:

153C. 3[(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 3a [and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A] :]

From the above it is transpired that the document found during the search at the place of searched party must belong to the assessee for initiating the proceedings under section 153C of the Act. The word belong used in section 153C requires that there has to be control and possession of the assessee (person other than searched person) on such document even though the assessee is not legal owner. As such the document found in the case on hand from the premises of the 3rd party, the assessee had no control of whatsoever on such document. Therefore in our considered view such document cannot be termed as belonging to the assessee. Once a document does not belong to the assessee as mandated under the provisions of section 153C of the Act, prior to the amendment, does not authorize the AO to initiate the proceedings against the assessee. In this connection we draw support and guidance from the judgment of Hon’ble Delhi High Court in the case of Pepsico India Holding (P.) Ltd. vs ACIT reported in 370 ITR 295 wherein it was observed that:

“the Assessing Officers should not confuse the expression ‘belongs to’ with the expressions ‘relates to’ or ‘refers to’. A registered sale deed, for example, ‘belongs to’ the purchaser of the property although it obviously ‘relates to’ or ‘refers to’ the vendor. In this example if the purchaser’s, premises are searched and the registered sale deed is seized, it cannot be said that it ‘belongs to’ the vendor just because his name is mentioned in the document. In the converse case if the vendor’s premises are searched and a copy of the sale deed is seized, it cannot be said that the said copy ‘belongs to’ the purchaser just because it refers to him and he (the purchaser) holds the original sale deed. In this light, it is obvious that none of the three sets of documents – copies of preference shares, unsigned leaves of cheque books and the copy of the supply and loan agreement – can be said to ‘belong to’ the petitioner”

We also find that the Hon’ble Gujarat High Court in the case of PCIT vs. Himanshu Chandulal Patel reported in 109 taxmann.com 202 after making a reference to the judgment of Hon’ble Delhi High Court in case of Pepsico India Holding (P.) Ltd (Supra) as discussed above has held as under:

“In the instant case, the documents, which were seized during the course of search, there may be some reference of the assessee, but that it-self would not be sufficient. It is necessary to show some nexus on the basis of some cogent materials between the documents seized and the assessee.”

From the above, it can be concluded that there cannot be any question of initiating the proceedings under section 153C of the Act, until and unless the documents found during the course of search from the premises of the 3rd party belongs to the assessee.

It is also pertinent to note that the assessee also raised similar contentions before the AO during the assessment proceedings but the same were rejected by the AO by holding that the case law relied by the assessee relate to the assessments completed prior to amendment in section 153C of the Act. The relevant finding of the AO stands as under:

“8. As far as case laws quoted by you in support of your claim kindly note that all these case laws are related to assessment completed prior to amendment in the section 153C and therefore will not be applicable in this case. In view of the above your objections to the assessment proceedings u/s 153C for AY 2014-15 and 2015-16 are hereby disposed off.”

In view of the above finding of the AO, the 2nd controversy arises whether the amendment brought under the provisions of section 153C of the Act, where the word ‘belong’ was replaced with the word ‘pertain’ is applicable for the year under consideration. The amended provisions of section 153C of the Act reads as under:

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, relates 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 and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person 2[for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and] for the relevant assessment year or years referred to in sub-section (1) of section 153A

In this regard we note that the search was conducted prior to the amendment i.e. 16th October 2014 but the notice was issued under section 153C of the Act subsequent to such amendment dated 29th of July 2016. Thus the controversy arises whether the provisions of prior to the amendment or subsequent to the amendment under section 153C of the Act as discussed above will be applicable in the case on hand. The controversy has been resolved by the jurisdictional High Court in the case of Anil Kumar Gopikisan Agrawal vs. ACIT reported in 106 Taxman.com 137 wherein it was held as under:

“19.9 In the facts of the present case, the search was conducted in all the cases on a date prior to 1st June, 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 harddisc containing in the information relating to the petitioners 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 of the Act in case of the petitioners, did not exist. It was only on 1st June, 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.

19.10 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, had issued notice under section 153C of the Act prior to the coming into force of the amended provision. The notice under section 153C of the Act 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) of the Act, 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 of the Act.

19.11 In the opinion of this court, 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 wherein in some cases, because the notices under section 153C of the Act 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 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 of the Act prior to the coming into force of the amended provisions and in any another case after the coming into force of the amended provisions.”

From the above judgment it is transpired that the provisions of section 153C as applicable on the date of search will be applied to the proceedings initiated therein. Thus there remains no ambiguity to the fact that the provisions of section 153C of the Act prior to the amendment therein, will be applicable in the case on hand which requires the AO to arrive at a satisfaction that the documents found from the premises of the 3rd party in the course of search belongs to the assessee. We have already explained the meaning of the word belongs in the preceding paragraph.

In view of the above, we are conscious to the fact that the seized material found from the premises of the 3rd party in the course of search does not belong to the assessee. Thus in our considered view the proceedings under section 153C of the Act, cannot be initiated. Hence, the assessee succeeds on his technical ground of appeal. Accordingly the technical ground raised by the assessee is allowed.

9. In the result the CO. filed by the assessee is allowed.

Coming to the IT(SS)A No. 15/RJT/2018 an appeal by the Revenue:

10. At the outset it is pertinent to note that we have already held that initiation of the proceeding under section 153C of the Act, in the case of the assessee is not valid vide paragraph No. 8 of this order. For the detailed discussion please refer the relevant paragraph. Once, the proceedings initiated under section 153C of the Act have been held as invalid, there is no reason to decide the issue raised by the Revenue on merit. Hence, we dismiss the grounds of appeal of the Revenue on merit as infructuous as these not required to be adjudicated separately. Hence the appeal filed by the Revenue is dismissed as infructuous.

11. In the result the appeal filed by the revenue is dismissed as infructuous.

12. In the combined result, the CO. of the assessee is allowed whereas the appeal filed by the revenue is dismissed as infructuous.

Coming to the IT(SS)A No. 16/Rjt/2018 by Revenue and CO No. 21/Rjt/2018 by the assessee in the case of Smt. Monaben Harikishanbhai for A.Y. 2014-15

13. The assessee has raised the grounds in the cross objection as detailed under:

“1.0 The grounds of cross-objections mentioned hereunder are without prejudice to one another.

2.0 The ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as the “CIT(A)”] erred on facts as also in law in dismissing the ground of appeal related to the validity of notice issued u/s 153C of the Income tax Act, 1961.

2.1 The notice issued u/s 153C of the Act is bad in law and without jurisdiction and therefore the same may kindly be quashed.”

14. The Revenue has raised the following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 5,58,67,080/- being on-money paid on the purchase of agricultural land.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition made on account of unexplained expenditure of Rs. 7,91,253/- and Rs.22,00,000/- (wrongly added as Rs.2,00,000/- in the computation of income.).

3. The CIT(A) has erred in facts and law in giving relief to the assessee by ignoring the contents of the seized document and the original statements given by the 4 sellers, and in relying on affidavits of the sellers submitted by the assessee at a much later date.

4. The CIT(A) has erred in facts and law by giving relief to the assessee ignoring the discrepancies in the statements of the farmers pointed out by the AO regarding the inconsistency in the statements.”

15. At the outset it is pertinent to note that in the identical facts and circumstances in the case of Late Shri Parvinsinh Nanubhai Zala in CO No. 10/Rjt/2018, we have already held that initiation of the proceedings under section 153C of the Act, are not valid vide paragraph number 8 of this order.

For the detailed discussion please refer the relevant paragraph. Therefore respectfully following the same and in order to maintain parity with finding we hold that the proceedings initiated under section 153C of the Act are not sustainable. Hence, the cross objection filed by the assessee is allowed.

16. Once, the proceedings initiated under section 153C have been held as invalid, there is no reason to decide the issue raised by the Revenue on merit. Hence, we dismiss the grounds of appeal of the Revenue on merit as infructuous as these are not required to be adjudicated separately. Hence the appeal filed by the revenue is dismissed as infructuous.

17. In the result the appeal filed by the revenue is dismissed as infructuous.

18. In the combined result, the CO. of the assessee is allowed whereas the appeal filed by the revenue is dismissed as infructuous.

Coming to the IT(SS)A No. 17/RJT/2018 by Revenue and CO No. 26/RJT/2018 by the assessee in case of Shri. Akshayrajsinh V Gohil for A.Y. 2014-15

19. The assessee has raised the grounds in the cross objection as detailed under:

“1.0 The grounds of cross-objections mentioned hereunder are without prejudice to one another.

2.0 The ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as the “CIT(A)”] erred on facts as also in law in dismissing the ground of appeal related to the validity of notice issued u/s 153C of the Income tax Act, 1961.

2.1 The notice issued u/s 153C of the Act is bad in law and without jurisdiction and therefore the same may kindly be quashed.”

20. The Revenue has raised the following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 3,38,75,060/- being on-money paid on the purchase of agricultural land.

2. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in law and/or on facts in deleting the addition made on account of unexplained expenditure of Rs. 5,58,670/-.

3. The CIT(A) has erred in facts in observing that name of the village is not matched by failing to appreciate that Lagdana and Keshardi are adjacent villages and the fact that the survey number matches exactly.

4. The CIT(A) has erred in facts and law in giving relief to the assessee by ignoring the contents of the seized document and the original statements given by the 4 sellers, and in relying on affidavits of the sellers submitted by the assessee at a much later date.

5. The CIT(A) has erred in facts and law by giving relief to the assessee ignoring the discrepancies in the statements of the farmers pointed out by the AO regarding the inconsistency in the ”

21. At the outset it is pertinent to note that in identical facts and circumstances in the case of Late Shri Parvinsinh Nanubhai Zala in CO No. 10/RJT/2018, we have already held that initiation of the proceedings under section 153C of the Act, are not valid vide paragraph number 8 of this order. For the detailed discussion please refer the relevant paragraph. Therefore respectfully following the same and in order to maintain parity with finding we hold the proceedings initiated under section 153C of the Act are not sustainable. Hence, the objection filed by the assessee is allowed.

22. Once, the proceedings initiated under section 153C have been held as invalid, there is no reason to decide the issue raised by the Revenue on merit. Hence, we dismiss the grounds of appeal of the Revenue on merit as infructuous as these are not required to be adjudicated separately. Hence the appeal filed by the Revenue is dismissed as infructuous.

23. In the result, the appeal filed by the Revenue is dismissed as infructuous.

24. In the combined result, the CO. of the assessee is allowed whereas the appeal filed by the Revenue is dismissed as infructuous.

Coming to the IT(SS)A No. 19/Rjt/2018 by Revenue and CO No. 9/Rjt/2018 by the assessee in case of Shri. Ketanbhai G Shobhana for A.Y. 2014-15

25. The assessee has raised the grounds in the cross objection as detailed under:

“1.0 The grounds of cross-objections mentioned hereunder are without prejudice to one another.

2.0 The ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as the “CIT(A)”] erred on facts as also in law in dismissing the ground of appeal related to the validity of notice issued u/s 153C of the Income tax Act, 1961.

2.1 The notice issued u/s 153C of the Act is bad in law and without jurisdiction and therefore the same may kindly be quashed.”

26. The Revenue has raised the following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.2,47,36,148/- being on-money paid on the purchase of agricultural land.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition made on account of unexplained expenditure of Rs. 9,42,859/-.

3. The CIT(A) has erred in facts in observing that name of the village is not matched by failing to appreciate that Lagdana and Kalyangadh are adjacent villages and the fact that the survey number matches exactly.

4. The CIT(A) has erred in facts and law in giving relief to the assessee by ignoring the contents of the seized document and the original statements given by the 4 sellers, and in relying on affidavits of the sellers submitted by the assessee at a much later date.

5. The CIT(A) has erred in facts and law by giving relief to the assessee ignoring the discrepancies in the statements of the farmers pointed out by the AO regarding the inconsistency in the statements.”

27. At the outset it is pertinent to note that in identical facts and circumstances in the case of Late Shri Parvin sinh Nanubhai Zala in CO No. 10/RJT/2018, we have already held that initiation of the proceedings under section 153C of the Act, are not valid vide paragraph number 8 of this order. For the detailed discussion please refer the relevant paragraph. Therefore respectfully following the same and in order to maintain parity with finding we hold that the proceedings initiated under section 153C of the Act are not sustainable. Hence, the objection filed by the assessee is allowed.

28. Once, the proceedings initiated under section 153C have been held as invalid, there is no reason to decide the issue raised by the Revenue on merit. Hence, we dismiss the grounds of appeal of the Revenue on merit as infructuous as these are not required to be adjudicated separately. Hence the appeal filed by the Revenue is dismissed as infructuous.

29. In the result the appeal filed by the revenue is dismissed as infructuous.

30. In the combined result, the CO. of the assessee is allowed whereas the appeal filed by the revenue is dismissed as infructuous.

Coming to the IT(SS)A No. 21/Rjt/2018 by Revenue and CO No. 13/Rjt/2018 by the assessee in case of Smt. Dhara Harsadrai Pandaya/Dharaben Mahijitbhai Bhatt for A.Y. 2014-15

31. The assessee has raised the grounds in the cross objection as detailed under:

“1.0 The grounds of cross-objections mentioned hereunder are without prejudice to one another.

2.0 The Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as the “CIT(A)”] erred on facts as also in law in dismissing the ground of appeal related to the validity of notice issued u/s 153C of the Income tax Act, 1961.

2.1 The notice issued u/s 153C of the Act is bad in law and without jurisdiction and therefore the same may kindly be ”

32. The Revenue has raised the following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.5,50,22,256/- being on-money paid on the purchase of agricultural land.

2. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in law and/or on facts in deleting the addition made on account of unexplained expenditure of Rs.9,65,298/-.

3. The CIT(A) has erred in facts and law in giving relief to the assessee by ignoring the contents of the seized document and the original statements given by the 4 sellers, and in relying on affidavits of the sellers submitted by the assessee at a much later date.

4. The CIT(A) has erred in facts and law by giving relief to the assessee ignoring the discrepancies in the statements of the farmers pointed out by the AO regarding the inconsistency in the ”

33. At the outset it is pertinent to note that in identical facts and circumstances in the case of Late Shri Parvin sinh Nanubhai Zala in CO No. 10/RJT/2018, we have already held that initiation of the proceedings under section 153C of the Act, are not valid vide paragraph number 8 of this order. For the detailed discussion please refer the relevant paragraph. Therefore respectfully following the same and in order to maintain parity with finding we hold that the proceedings initiated under section 153C of the Act are not sustainable. Hence, the objection filed by the assessee is allowed.

34. Once, the proceedings initiated under section 153C have been held as invalid, there is no reason to decide the issue raised by the Revenue on merit. Hence, we dismiss the grounds of appeal of the Revenue on merit as infructuous as these are not required to be adjudicated separately. Hence the appeal filed by the Revenue is dismissed as infructuous.

35. In the result the appeal filed by the revenue is dismissed as infructuous.

36. In the combined result, the CO. of the assessee is allowed whereas the appeal filed by the revenue is dismissed as infructuous.

Coming to the IT(SS)A No. 22/Rjt/2018 by Revenue and CO No. 25/Rjt/2018 by the assessee in case of Shri Dharmendra Singh B Chudasma for A.Y 2014-15

37. The assessee has raised the grounds in the cross objection as detailed under:

“1.0  The grounds of cross-objections mentioned hereunder are without prejudice to one another.

2.0 The ld. Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as the “CIT(A)”] erred on facts as also in law in dismissing the ground of appeal related to the validity of notice issued u/s 153C of the Income tax Act, 1961.

2.1 The notice issued u/s 153C of the Act is bad in law and without jurisdiction and therefore the same may kindly be quashed.”

38. The Revenue has raised the following grounds of appeal

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.1,81,37,650/- being on-money paid on the purchase of agricultural land.

2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition made on account of unexplained expenditure of Rs.2,97,847/-.

3. The CIT(A) has erred in facts in observing that name of the village is not matched by failing to appreciate that Lagdana and Keshardi are adjacent villages and the fact that the survey number matches exactly.

4. The CIT(A) has erred in facts and law in giving relief to the assessee by ignoring the contents of the seized document and the original statements given by the 4 sellers, and in relying on affidavits of the sellers submitted by the assessee at a much later date.

5. The CIT(A) has erred in facts and law by giving relief to the assessee ignoring the discrepancies in the statements of the farmers pointed out by the AO regarding the inconsistency in the statements.”

39. At the outset it is pertinent to note that in identical facts and circumstances in the case of Late Shri Parvin sinh Nanubhai Zala in CO No. 10/RJT/2018, we have already held that initiation of the proceedings under section 153C of the Act, are not valid vide paragraph number 8 of this order. For the detailed discussion please refer the relevant paragraph. Therefore respectfully following the same and in order to maintain parity with finding we hold that the proceedings initiated under section 153C of the Act are not sustainable. Hence, the objection filed by the assessee is allowed.

40. Once, the proceedings initiated under section 153C have been held as invalid, there is no reason to decide the issue raised by the Revenue on merit. Hence, we dismiss the grounds of appeal of the Revenue on merit as infructuous as these are not required to be adjudicated separately. Hence the appeal filed by the Revenue is dismissed as infructuous.

41. In the result the appeal filed by the revenue is dismissed as infructuous.

42. In the combined result, the CO. of the assessee is allowed whereas the appeal filed by the revenue is dismissed as infructuous.

Coming to the ITA No. 22/Rjt/2018, an appeal by Revenue in case of Smt. Dhara Harsadrai Pandaya/Dharaben Mahijitbhai Bhatt pertaining to A.Y. 2015-16

43. The Revenue has raised the following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs.4,87,24,277/- being on-money paid on the purchase of agricultural land.

2. The CIT(A) has erred in facts and law in giving relief to the assessee by ignoring the contents of the seized document and the original statements given by the 4 sellers, and in relying on affidavits of the sellers submitted by the assessee at a much later date.

3. The CIT(A) has erred in facts and law by giving relief to the assessee ignoring the discrepancies in the statements of the farmers pointed out by the AO regarding the inconsistency in the ”

44. The only effective ground raised by the Revenue is that the learned CIT (A) erred in deleting the addition of Rs. 4,87,24,277/- on account on-money paid against purchase of agricultural land.

45. The facts in brief as culled out from the order of the authorities below are that the assessee the present case is an individual and engaged in the trading business of dress materials running in her proprietary concern under the name and style M/s Dhara The assessee in the year under consideration filed her return of income under section 139 of the Act dated 23rd March 2016 declaring total income at Rs. 7,81,470/- only. The assessee during the year has purchased 2 piece of plots bearing survey No. 1223 and 1242 at Rs. 27,75,000/- and Rs. 58,40,000/- respectively. The assessee purchased both the plots dated 21st February 2015. The assessee claimed that the area of the plots bearing No. 1223 and 1242 consists of the area 8.21 and 17.31 Bigha respectively.

However, the AO during the assessment proceedings found that there was a search and seizure operation carried out at the premises of ADPL dated 16 October 2014. As a result of search various documents incriminating in nature were found including two excel sheets bearing BOOK1(1) and BOOK1(2) which were extracted from the hard disk drive of the computer of the searched person. These documents were excel sheets containing various details such as survey numbers, size (vigha), amount paid and legal status etc. On the top of excel sheet, the date was mentioned i.e. 14 April 2014. Out of various survey numbers mentioned in the excel sheet, one survey bearing No. 1223 was representing the land purchased by the assessee.

The AO on verification of the sale deeds of the impugned survey Nos. found that the amount mentioned therein viz a viz the amount mentioned in the seized document does not match. As such the amount mentioned in the seized documents was greater than the amount mention in the registered documents. Accordingly he was of the view that the assessee has made investment in the impugned lands without recording the same in the books of accounts. Accordingly, the AO proposed to make the following additions by issuing a show cause notice dated 10th December 2016:

“6. Further as per your submission for AY 2015-16 you have also purchased survey number 1223 and 1242 at village Gangad during the year. As per the seized data the average on-money figure per “bigah” is arrived at Rs 12,58,700/-. Therefore the average on-money paid on the purchase for these survey numbers is calculated as tabulated below: 

Survey number as per seized document Amount as per registered agreement Reg Number Date Average on-money paid
1223 Rs 27,75,000/- 481 21/2/2015 12.45*1258700 = 1,56,70,815/-
1242 Rs 58,40,000/- 482 21/2/2015 26.26*1258700 = 3,30,53,462/-

7. The above facts were confronted to the assessee vide show cause dated 12.2016. The assessee was further asked to submit why the addition of Rs 4,87,24,277/- being on money payment should not be made in her hands for AY 2015-16.”

The assessee in response to such show cause notice vide letter dated 24 December 2016 submitted as under:

i. The excel sheets were found from the HDD of the company namely ADPL in the course of search conducted under section 132 of the Act. There was no direct or indirect relationship between her and the searched person as discussed above. There was no name, signature, banking details, PAN of the assessee except the survey number registered in her name. There was no information about the author of such seized materials. Similarly the purpose of such noting in the seized material was also not ascertainable. The search party has also not brought anything on record such as the purpose and the author of such noting. The seized document was neither written by the assessee being the purchaser nor by the seller of the impugned survey number. The date mention on the seized document was 14th April 2014 whereas the assessee has purchased agricultural lands at different dates which vary much before and much later from the date mentioned in the seized document.

ii. There was no opportunity of cross-examination provided to the assessee of the seller ( Mohd. Khan Gulab khan Pathan) of the land bearing survey No. 1223 wherein it was accepted that the assessee has paid on money. The assessee also filed the affidavit of the seller denying the fact to have received any on money.

iii. There was no evidence available on record suggesting that the assessee has paid any on money on the purchase of such pieces of lands.

iv. There was no reference about the land bearing survey No. 1242 in the excel sheet found during the course of search as discussed above.

Accordingly, there is no question of making any addition on account of on money in the purchase of such pieces of land.

However, the AO disregarded the contention of the assessee by observing as under:

“9. The reply of the assessee is persued and the same is not found convincing. The point wise rebuttal to the assessee’s submission is given in the ensuing paragraphs.

9.1 The assessee contended that he was not allowed the opportunity to cross- examine. In this connection, it may be stated that request for cross-examination was made at the fag end of limitation period and the deponents have in their statements specifically stated that assertions made in the statements are true and correct without any threat or Therefore, the statements recorded in post-search enquiries carry high evidentiary value, which cannot be brushed aside simply because of an opportunity of cross-examination was not availed.

9.2 The assessee also submitted the affidavits of the seller parties denying the receipt of on-money. These affidavits are verified, but it is observed that averments made in the affidavits are contrary to the facts, statements recorded of some sellers in post-search enquiries and excel sheet seized during the search and therefore, such affidavits are nothing but afterthought Therefore, this stand of the assessee failed to survive.

9.3 Secondly, the assessee raised doubt about the authenticity of excel sheet seized from the computer hard disk of M/s. Amidhara Developers Ltd. (“ADPL”) and it is also stated that name and signature of the assessee is absent in the seized sheet, therefore, such sheet is nothing but a dumb document. Submission of the assessee is thoroughly considered but not found convincing in view of the following undisputed facts:

i. The director of the ADPL accepted the fact regarding the excel sheet recovered from the computer hard-disk lying at their business premises.

ii. Name of the village “Gangad” and Survey Numbers of the land in the excel sheet matches with the land purchased by the assessee.

iii. Payment made as per the excel sheet for purchase of land varies with the registered sale deed.

iv. In the post-search enquiries, some of the sellers of land have accepted receipt of higher amount then recorded in the registered sale Not only that, they have also explained the application of such higher amount received.

v. Under the above circumstances, it is hard to believe that no on-money component is involved in the land deals made by the assessee, particularly when there is reference of excess amount paid on purchase of land in the excel sheet.

9.4 Thirdly, the assessee stated they have no connection with the searched party, i.e., ADPL, in whose possession an excel sheet was However, this argument of the assessee is not acceptable in view of the fact that some of the assessee’s family members have purchased flat, which was constructed by ADPL. Therefore, it is established that the assessee was in business relationship with ADPL and its directors / owners. Thus, this itself proves that an excel sheet found from the premises of ADPL is important piece of paper, which carries high evidentiary value.

9.5 The assessee further stated that there is difference in on-money payment as stated in excel sheet and as per the statement of sellers of land and therefore, the data contained in excel sheet has no relation with the actual deal and no conclusion can be drawn on the basis of some casual The contention of the assessee is not correct and misleading, because, acceptance by the sellers of agricultural land of higher consideration in cash itself suggest the involvement of on-money. Further, excel sheet recovered during the search carries high evidentiary value and therefore, the department has no option except to take the base of seized excel sheet to determine correct quantum of on-money paid by the assessee and therefore, data contained in excel sheet is considered the actual value of the land purchased by the assessee.

9.6 In respect of agricultural land purchased by the assessee at Survey 1223, the assessee submitted that on-money payment worked out is on the basis of hypothetical figure of average on-money per bigha and therefore, addition proposed in the show cause notice is on arbitrary manner, In this regard, it can be stated that the excel sheet seized from the premises of ADPL reflects “token money” paid by the assessee of Rs. 4,50,000/- in respect of land at Survey No. 1223. This infers that at the time of preparation of excel sheet, full money was not paid by the assessee to the seller. Further, on verification of the registered sale deed, it observed that the land at Survey No. 1223 was purchased vide sale deed registered on 21.02.2015, i.e., after the search in the case of ADPL and there is no reference of the amount paid of Rs.4,50,000/- in the said sale deed. This fact proves that balance consideration towards the purchase of land is paid by the assessee after the search and therefore, there is no reference of any on-money payment in the seized excel sheet. However, looking to the fact that the assessee has paid on-money in the other lands purchased in the same vicinity and sellers of such other lands have accepted the receipt of on-money, it is illogical that the assessee has not paid any on-money in the land purchased at Survey No. 1223. Therefore, the on-money payment in the impugned land is worked out on scientific basis by applying the on-money rate per bigha in the other lands purchased by the applicant, reference of which is found in the seized excel sheet. Hence, the on- money payment determined is on scientific basis and not on the basis of hypothetical figures.

9.7 Similarly, the assessee argued that there is no reference of land purchased by her in Survey 1242 in the seized excel sheet and therefore, no addition could be made of on-money paid for such land. In this connection, as stated supra, it is an established fact that the assessee has paid on-money in the other lands situated at nearby survey numbers in the same locality. Further, it is also observed that the land at Survey No, 1242 is purchased by the assessee by sale deed registered on 21.02.2015, i.e., after the date of search in the case of ADPL. Therefore, it is obvious that the reference of said land deal is not found in the excel sheet seized. However, looking to the fact that the assessee has paid on-money in the other lands purchased in the same vicinity and sellers of such other lands have accepted the receipt of on-money, it is illogical that the assessee has not paid any on-money in the land purchased at Survey No. 1242. Therefore, the on-money payment in the impugned land is worked out on scientific basis by applying the on-money rate per bigha in the other lands purchased by the applicant, reference of which is found in the seized excel sheet. Hence, the on- money payment determined is on scientific basis and not on the basis of hypothetical figures.

9.8 The assessee placed reliance on various decision of the ITAT, High Courts and Supreme All such cases are given due consideration, but the facts of the cases relied upon by the assessee are totally different from the facts of the case on hand and are distinguishable. Therefore, such decisions could not come to the help of the assessee. The assessee relied upon the recent decision of Hon’ble Supreme Court of India in the case of PIL filed by the lawyer Prashant Bhushan, wherein, Hon’ble Court refused to order any inquiry against the politicians on the basis of documents recovered by department during searches conducted at Birla & Sahara offices. In this connection, it is seen that Hon’ble Supreme Court has directed the petitioner and the department to come with “better material” to support the allegations, in this context, in the instant case, the department is having sound proof in the form of excel sheet having reference of name of village, survey number, amount paid etc., which is the important piece of evidence against the assessee. Further, corroborative evidences in form of statements recorded of sellers of land in post-search enquiries strengthens the stand of the Department that the assessee, indeed has paid on-money for purchase of agricultural lands.

9.9 Now, moving towards the quantum of such on-money payment, I believe that nothing shall be better than the excel sheet seized from the premises of The content in the excel sheet is self-speaking the facts and shows actual purchase value of the land and payment made by the assessee.

10. As the assessee has concealed the income by not offering the same in the return of income filed u/s 139, penalty proceeding u/s 271(l)(c) is being initiated for concealment of income on Rs 5,50,22,256/-, being on-money paid on the purchase of land in AY 2015-16.

11. With above remarks, the total income of the assessee is computed as under:-

Returned Income RS.7,81,470/-
+ Addition being on-money paid on the purchase Rs. 4,87,24,277/-
Assessed Income Rs.4,95,05,747/-

 46. Aggrieved assessee preferred an appeal to the learned CIT (A).

47. The assessee before the learned CIT (A) besides reiterating the submissions as made before the AO further contended that the AO has worked out the rate of on money at Rs. 12,58,700 per Bigha at his own surmise and conjecture without bringing any material on record. As such there was no basis adopted by the AO for working out the amount of on money. The AO in his letter dated 12 December 2016 has stated that “this implies that the balance amount has been paid as on money”

The AO has taken the area of land purchased by the assessee bearing No. 1223 and 1242 at 12.45 and 26.26 Bighas whereas the actual area of the land is at 8.21 and 17.31 bighas.

The learned CIT (A) after considering the submission of the assessee directed the AO to provide the opportunity for cross-examination to the assessee and accordingly called for the remand report. The AO in his remand report has submitted that Mohd. Khan Gulab Khan Pathan, the seller of the land bearing No. 1223 has retracted from his earlier statement furnished on 7 November 2014 during the cross-examination for having received any on money from the assessee. However the AO in his remand report has commented that the retraction statement of the party should not be accepted which was given after the gap of 2 years and 8 months.

The learned CIT (A) after considering the submission of the assessee and the remand report arrived at the conclusion that there was no evidence available on record suggesting that there was any on money paid by the assessee to the seller of the land.

Similarly there was no mention about the survey number bearing 1242 in the excel sheet found during the course of search. Therefore there cannot be any addition with respect to such survey number on account on money as alleged by the AO. Accordingly the learned CIT (A) deleted the addition made by the AO.

48. Being aggrieved by the order of the learned CIT (A), the revenue is in appeal before us.

49. Both the learned DR and the AR before us relied on the order of the authorities below as favorable to them.

50. We have heard the rival contentions of both the parties and perused the materials available on record. From the preceding discussion we note that the addition has been made by the AO on the basis of the excel sheet found during the course of search in the case of ADPL which is 3rd party and has no connection either directly or indirectly with the assessee. Furthermore, there was enquiry conducted with the seller of the land who accepted to have received on money from the assessee.

First of all, we find that there was no mention/reference of survey No. 1242 in the excel sheet found during the course of search, therefore we are of the view that there cannot be any addition on account of on money. It is because there was no iota of evidence available with the AO suggesting that there was any on money paid by the assessee.

Regarding the land bearing survey No. 1223, we note that this impugned survey number was very much mentioned in the excel sheet found from the 3rd party as discussed above. However that information cannot be the basis of making any addition to the total income of the assessee. It is because it does not suggest that any on money has been paid by the assessee. Furthermore it is a piece of information found from the 3rd party which has no dealing of whatsoever with the assessee. Moreover, no fact has been brought on record by the AO except that the relatives of the assessee has purchased some flats property constructed by ADPL which is not sufficient enough to draw any inference against the assessee based on such excel sheet. Thus in the absence of any documentary evidence about the payment of on money, we hold that there cannot be any addition to the total income of the assessee. In holding so we draw support and guidance from the order this Tribunal in the case of Jawaharbhai Atmaram Hathiwala v. Income-tax Officer reported in 128 TTJ 36 wherein it was held as under:

“Held that no evidence could be brought on record by the Revenue to show that in fact the assessee had paid ‘on money’ to the developers. No document containing signature of the assessee or handwriting of the assessee to corroborate the above making of payment by the assessee was found during the course of the search. Merely recording made by a third party or statement of a third party could not be treated as so sacrosanct so as to read as a positive material against the assessee. Therefore, addition in the hands of the assessee on account of ‘on-money’ was not justified.”

In view of the above we find no infirmity in the order of the learned CIT (A). Accordingly we decline to interfere. Hence the ground of appeal of the Revenue is dismissed.

Coming to the IT(SS)A No. 23/Rjt/2018 by Revenue and CO No. 11/Rjt/2018 by the assessee in the case of Smt. Seemaben Ashokbhai Satikunver for A.Y. 2014-15

51. The assessee has raised the grounds in the cross objection as detailed under:

“1.0 The grounds of cross-objections mentioned hereunder are without prejudice to one another.

2.0 The Commissioner of Income Tax (Appeals)-11, Ahmedabad [hereinafter referred to as the “CIT(A)”] erred on facts as also in law in dismissing the ground of appeal related to the validity of notice issued u/s 153C of the Income tax Act, 1961.

3.0 The notice issued u/s 153C of the Act is bad in law and without jurisdiction and therefore the same may kindly be ”

52. The Revenue has raised the following grounds of appeal:

“1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in law and/or on facts in deleting the addition of Rs. 5,35,51,897/- being on-money paid on the purchase of agricultural land.

2. On the facts and in the circumstances of the case and in law, the CIT(A) has erred in law and/or on facts in deleting the addition made on account of unexplained expenditure of Rs. 6,02,218/- and Rs. 2,00,000/-.

3. The CIT(A) has erred in facts and law in giving relief to the assessee by ignoring the contents of the seized document and the original statements given by the 4 sellers, and in relying on affidavits of the sellers submitted by the assessee at a much later date.

4. The CIT(A) has erred in facts and law by giving relief to the assessee ignoring the discrepancies in the statements of the farmers pointed out by the AO regarding the inconsistency in the ”

53. At the outset it is pertinent to note that in the identical facts and circumstances in the case of Late Shri Parvinsinh Nanubhai Zala in CO No. 10/Rjt/2018, we have already held that initiation of the proceedings under section 153C of the Act, are not valid vide paragraph number 8 of this order. For the detailed discussion please refer the relevant paragraph. Therefore respectfully following the same and in order to maintain parity with finding we hold that the proceedings initiated under section 153C of the Act are not sustainable. Hence, the cross objection filed by the assessee is allowed.

54. Once, the proceedings initiated under section 153C have been held as invalid, there is no reason to decide the issue raised by the Revenue on merit. Hence, we dismiss the grounds of appeal of the Revenue on merit as infructuous as these are not required to be adjudicated separately. Hence the appeal filed by the revenue is dismissed as infructuous.

55. In the result the appeal filed by the revenue is dismissed as infructuous.

56. In the combined result, the CO. of the assessee is allowed whereas the grounds of appeal filed by the revenue are dismissed as infructuous.

57. Before we part with the issue/appeal as discussed above, it is pertinent to note that the clause © of rule 34 of the Appellate Tribunal Rules 1963 requires the bench to make endeavour to pronounce the order within 60 days from the conclusion of the hearing. However the period of 60 days can be extended under exceptional circumstances but the same should not ordinarily be further extended beyond another 30 days. In simple words the total time available to the Bench is of 90 days upon the conclusion of the hearing.

However, during the prevailing circumstances where the entire world is facing the unprecedented challenge of Covid 2019 outbreak, resulting the lockdown in the country, the orders though substantially prepared but could not be pronounced for the unavoidable reasons within the maximum period of 90 days.

In such circumstances we find that the Hon’ble Mumbai Tribunal in the case of JSW Limited Vs Deputy Commissioner of Income Tax in ITA No. 6103/MUM/2018 vide order dated 14-5-2020 extended the time for pronouncing the order within 90 days of time by observing as under:

9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon’ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon’ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, the lockdown by observing that “In case the limitation has expired after 15.03.2020 then the period from 15.03.2020 till the date on which the lockdown is lifted in the jurisdictional area where the dispute lies or where the cause of action arises shall be extended for a period of 15 days after the lifting of lockdown”. Hon’ble Bombay High Court, in an order dated 15th April 2020, has, besides extending the validity of all interim orders, has also observed that, “It is also clarified that while calculating time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”, and also observed that “arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020”. It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus “should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure…”. The term ‘force majeure’ has been defined in Black’s Law Dictionary, as ‘an event or effect that can be neither anticipated nor controlled’ When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an “ordinary”

10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon’ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon’ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made time-bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly”. The extraordinary steps taken suo motu by Hon’ble jurisdictional High Court and Hon’ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period  during which the normal time limits are to remain in force. In our considered view, even without the words “ordinarily”, in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried out on the facts of this case.

11. To sum up, the appeal of the assessee is allowed, and appeal of the Assessing Officer is dismissed. Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board.

 Considering the above, we express to pronounce the order beyond the period of 90 days. Accordingly, we proceed to pronounce the order as on date.

58. In the combined result, Revenues’ appeal in IT(SS)A Nos. 15, 16, 17, 19, 21 & 22/Rjt/2018 & ITA No.23/Rjt/2018 are dismissed whereas assessees’ cross objections in CO Nos. 10, 21, 26, 9, 13, 25 & 11/Rjt/2018 are allowed.

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