Gujarat High Court
Bhavin Kishorebhai Zinzuwadia vs Assistant Commissioner Of Income Tax ... on 2 December, 2024
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024
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Reserved On : 22/10/2024
Pronounced On : 02/12/2024
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 22170 of 2019
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
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Approved for Reporting Yes No
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BHAVIN KISHOREBHAI ZINZUWADIA
Versus
ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 2(3),
AHMEDABAD
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Appearance:
MR B S SOPARKAR(6851) for the Petitioner(s) No. 1
MR.VARUN K.PATEL(3802) for the Respondent(s) No. 1
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
CAV JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr. B.S.Soparkar for the petitioner. Learned Senior Standing Counsel Mr. Varun Patel for the respondent.
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2. The petitioner has challenged the notice dated 06.11.2019 issued under section 153C of the Income Tax Act,1961 [for short 'the Act'] for the Assessment Years 2009-10 to 2014-15.
3. The notice under section 153C of the Act was originally issued on 05.08.2019 for A.Y. 2011-12 to 2017-18. However, on 23.10.2019, the respondent withdrew the same and issued fresh notices for A.Y. 2009-10 to 2014-15 on 06.11.2019.
4.The petitioner, on receipt of the notices, vide letter dated 18.11.2019 requested the respondent assessing officer for documents relied upon by the respondent along with satisfaction recorded under section 153C of the Act. The respondents supplied satisfaction recorded by the Assessing Officer of the searched person on 31.03.2018 Page 2 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined as well as the satisfaction recorded by the respondent vide letter dated 25.11.2019. As per the satisfaction note, for initiation of the assessment proceedings under section 153C of the Act, it is revealed that during the course of search at the office premises of M/s. Venus Infrastructure and Developers Pvt Ltd and Shri Ashok S. Vasvani for Venus Group on 10.03.2015, various loose papers, documents and digital data were seized and 11 documents pertaining to the petitioner were identified.
5. The respondent who is Assessing Officer of the petitioner, recorded satisfaction note on 23.10.2019 for initiation of the assessment proceedings under section 153C of the Act for the Assessment Years 2009-10 to 2014-15 in respect of each of the Assessment Year falling within six Assessment Years immediately preceding the Assessment Year Page 3 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined relevant to previous year in which the search was conducted.
6. The respondent in the satisfaction note dated 23.10.2019 has recorded that from analysis of seized material and digital evidence it was gathered that the petitioner is one of the purchasers of the property in the project as stated in the registered deed which has been developed by Venus Group in which, cash has been paid to Venus Group in various financial years. The respondent analyzed the incriminating seized material at page No. 127 of the Annexure A-69 seized from the terrace of Crystal Arcade where the search was conducted and recorded that date mentioned on this page was in coded form. It was further recorded that there is clear mention of payment received in respect of the properties purchased by the petitioner and his family members reflecting the unaccounted cash Page 4 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined receipts in the summary sheet of the unaccounted cash receipts from the project Venus Amadeus over and above the document price of Rs. 3,43,25,000/- paid during Financial Year 2010-11 for property bearing premises Nos. 5 & 6 of Ground Floor and during Financial Year 2011-12, an amount of Rs. 2 Crore was paid in cash. The respondent-
Assessing Officer therefore, has arrived at a satisfaction on the basis of the incriminating seized material where it was noticed that the date and amount mentioned on the pages were coded which were related to the cash for Venus Amandeus Project and unit number was also mentioned on the same as well as cash vouchers were duly signed by the initials of Rajesh S. Vaswani and Narendra Panjwani. The respondent-Assessing Officer has therefore arrived at satisfaction that the information contained in the incriminating seized material relates to the Page 5 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined petitioner which has bearing on the determination of the total income relevant to the Assessment Years 2009-10 to 2014-15.
7. Learned advocate Mr. B.S. Soparkar for the petitioner submitted that the impugned notices under section 153C of the Act are time barred in view of the decision of the Hon'ble Supreme Court in case of CCIT vs. Calcutta Knitwears reported in 362 ITR 673 (SC) read with CBDT Circular No. 24/2015. It was submitted that as per the decision of the Supreme Court as well as the Circular of the CBDT, satisfaction note must be recorded within the timeline stipulated therein viz.
at the time of search or during the assessment proceedings or at the end of the assessment proceedings of the searched person.
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8. It was submitted that in the facts of the case, the search was conducted on 10.03.2015 whereas, the satisfaction note of Assessing Officer of the searched person was recorded on 31.03.2018 i.e. almost after three years whereas, the satisfaction note dated 23.10.2019 recorded by the respondent-
Assessing Officer of the petitioner was even later i.e. after more than four years from the date of the search and one and half years from the date of the satisfaction note recorded by the Assessing Officer of the searched person.
9. It was therefore submitted that as the satisfaction note ought to have been recorded at the time of search along with initiation of the proceedings against the searched person and in view of the facts of the case, as the same is recorded only after more than three years from the date of search, such Page 7 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined satisfaction note is therefore, time barred.
Reliance was placed on the decision of CIT vs. Jitendra H. Modi vs. reported in 403 ITR 110 (Guj.) and in case of Commissioner of Income Tax vs. Bharat Bhushan Jain reported in 370 ITR 695 (Delhi).
10. It was further contended that the impugned notices are also time barred for the reason that six years must be computed from the date when the materials were forwarded to the jurisdictional Assessing Officer. Reliance was placed on the decision of the Hon'ble Supreme Court in case of CIT vs. Jasjit Singh reported in 458 ITR 437 (SC). It was submitted that as per the decision of the Hon'ble Apex Court, three situations would arise as under:
(a) If the date of receiving the books of accounts, documents or asset seized or requisitioned by the Assessing Officer Page 8 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined having jurisdiction over such person is to be taken as 31.03.2018, then the jurisdiction to issue notice is only for Assessment Years 2012-13 to Assessment Year 2017-18.
(b) If the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over the petitioner is to be taken as 01.04.2018 i.e. after the date of recording of the satisfaction on 31.03.2018 by the Assessing Officer of the searched person, then jurisdiction to issue notice would be only for Assessment Years 2013-14 to 18-2019.
(c) If the date of receiving books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over the petitioner is to be taken as 23.10.2019, then jurisdiction to issue notice would be from Assessment Year 2014-15 to Assessment Year 2019-20.Page 9 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024
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11. Reference was also made to the decision of this Court in case of Anilkumar Gopalkishan Agarwal vs. Assistant Commissioner of Income Tax reported in 418 ITR 25 (Guj) to submit that in Para 21 thereof this Court has considered as to how the computation of six assessment years in respect of which notice is required to be issued under section 153C of the Act.
12. It was further submitted that on perusal of the satisfaction notice of the Assessing Officer of the searched person as well as that of the respondent-Jurisdictional Assessing Officer on the bare perusal of the same that incriminating material found during the course of the search is only for Assessment Years 2011-12 and 2012-13 and therefore, notices could not have been issued for those years for which no incriminating material is found during the course of search Page 10 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined relating to the petitioner. Reliance was placed on the decisions of the Apex Court in case of CIT vs. Singhad Technical Education Society vs. reported in 397 ITR 344 SC and the decision of Delhi High Court in case of Principal Commissioner of Income Tax (Central)-2 vs Index Securities (P.) Ltd reported in [2017] 86 Taxman.com 84 (Delhi).
13. It was also submitted that no valid satisfaction is recorded by both the Assessing Officers to assume jurisdiction to issue notice as in view of the fact that incriminating material referred to in the satisfaction note does not disclose which document relates to the petitioner leading to the belief that there is unaccounted income.
It was submitted that the satisfaction note only refers to the documents found during the course of the search from the Venus Group and it only says that in case of the petitioner Page 11 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined Rs. 4.8 Crore on-money was paid without referring to any incriminating material against the petitioner. Reliance was placed on the following decisions:
a.Principal Commissioner of Income Tax vs. Abhisar Buildwell (P.) Ltd reported in 454 ITR 212(SC) b.Sri Sai Cashews reported in [2021] 131 taxmann.com 177 (Orissa) c.Principal Commissioner of Income Tax vs. Vikas Telecom Ltd reported in [2022] 135 taxmann.com 362 (Delhi) d.Sunway Realtech (P.) Ltd reported in [2022] 142 taxmann.com 477 (Delhi)
14. Per contra, learned Senior Standing Counsel Mr. Varun Patel for the petitioner submitted that separate satisfaction notes are recorded by the Assessing Officers. It was pointed out that search was conducted on 10.03.2015 at 17 premises of Venus Group of Ahmedabad and the last warrant of authorization was excluded during the month of May,2015 relevant to Page 12 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined Financial Year 2015-16 and therefore, time limit to pass the Assessment Order under section 153A of the Act in the cases related with the Venus Group was upto 31.03.2018 i.e. after 24 months from the end of the Financial year in which the last warrant of authorization was executed as per provision of section 153B of the Act. It was therefore, submitted that the Assessing Officer of the searched person recorded the satisfaction on the last date of the period on which, the assessment of the searched person was to be completed i.e. on 31.03.2018.
15. It was therefore, submitted that as per the CBDT Circular No. 24/2015 dated 31.12.2015 which has prescribed three timelines for recording of the satisfaction note in case of the other persons referred to in section 153C of the Act by the Assessing Officer of the searched person is adhered to as the Page 13 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined Assessing Officer of the searched person has recorded the satisfaction note on 31.03.2018 which was within the time limit available to him for completing Assessment Proceedings in the cases related with the searched group.
16. Learned Senior Standing Counsel Mr. Patel further submitted that there is no time limit prescribed for recording satisfaction note in case of the person other than the searched person and no prejudice is caused to the petitioner for recording the satisfaction note by the respondent on 23.10.2019 and the alleged delay in recording satisfaction note in the facts of the case cannot be the ground to quash the impugned notices when both the Assessing Officers have arrived at the satisfaction on the basis of the incriminating material seized during the course of search that the petitioner has paid Page 14 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined on-money in cash for purchase of the immovable property from the Venus Group.
17. With regard to contention of the petitioner that the impugned notices are time barred for the reason that six years must be computed from the date when the material was forwarded to the Jurisdictional Assessing Officer as per the decision of the Hon'ble Apex Court, it was submitted that satisfaction note was recorded after the amendment of the provision of section 153C by the Finance Act, 2015 w.e.f. 01.06.2015. Reliance was placed on the decision of the Hon'ble Apex Court in case of ITO vs. Vikram Sujit Kumar Bhatia reported in 453 ITR 417 wherein it is held that the amended provisions are not substantive but clarificatory of the previous wordings of the provisions. It was further submitted that the provision of section 153C refers to the assessment or re-assessment of the income of Page 15 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined the other person in accordance with the provision of section 153A and as per the second proviso to section 153A of the Act which has been inserted by the Finance Act 2017 w.e.f. 01.04.2017, 'relevant assessment year' has been explained as per the Explanation-1 to mean an assessment year preceding the Assessment Year relevant to the previous year in which, the search is conducted or requisition is made which falls beyond six years but not later than ten Assessment Years from the end of the Assessment Year relevant to the previous year in which the search is conducted or requisition is made if the escaped assessment amount amounts to or is likely to amount to Rs. 50 Lakh or more. It was therefore, submitted that in the facts of the case, the respondent-Assessing Officer has arrived at the satisfaction that there is likely escapement of income of Rs. 4,80,25,000/- in Page 16 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined the Financial Years 2010-11 and 2011-12. It was therefore, submitted that even applying the decision of the Hon'ble Apex Court in case of CIT vs. Jasjit Singh (supra), the impugned notices are to be considered as issued for Assessment Years covering the period of ten Assessment Years from A.Y 2009- 10 to A.Y. 2018-19 which would include the Assessment Year 2011-12 and 2012-13 in any of the three scenarios considering the date of forwarding the incriminating seized material by the Assessing Officer of the searched person to the jurisdictional Assessing Officer either it being 31.03.2018 or 02.04.2018 or 21.10.2019. It was therefore, submitted that the impugned notices may be considered within the jurisdiction of the Assessing Officer upto Assessment Year by considering the total period for reassessment of ten assessment years has escaped assessment amount is more than Rs. 50 Lakh.
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18. With regard to the contention raised on behalf of the petitioner that notices cannot be issued for those years for which no incriminating material is found as well as no valid satisfaction is recorded to assume the jurisdiction by the respondent-Assessing Officer, it was submitted that such contention can be raised by the petitioner during the course of the assessment proceedings and the Assessing Officer can consider the same in accordance with law as the petitioner has alternative remedy of preferring an appeal if aggrieved by the assessment order which may be passed by the respondent-Assessing Officer.
19. In support of his submissions reliance was placed on the decision of the Delhi High Court in case of Indian National Congress vs. Dy. Commissioner of Income Tax reported in Page 18 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined [2024] 160 taxmann.com (Delhi) wherein, it is held that the satisfaction note merely forms the foundation for the initiation of the action which would enable the Court to evaluate whether an opinion has been validly formed and as long as it rests on incriminating material which pertains to the assessment years in question, the same would qualify the requirement of section 153C of the Act. It was therefore, submitted that satisfaction note recorded by the respondent-
Assessing Officer based upon the incriminating seized material prima facie shows the payment of on-money in cash by the petitioner for purchase of the property from the Venus Group which would be the subject-
matter of assessment proceedings.
20. Reliance was also placed on the decision of the Delhi High Court in case of Principal Commissioner of Income Tax vs Karina Airlines Page 19 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined International Ltd. reported in (2024) 165 taxman.com 421 wherein it is held that in case of search conducted in the Year 2016 and the satisfaction was recorded in 2019 after amendment to 153C by the Finance Act,2017 came into effect, block period of six assessment years would get extended to ten Assessment Years.
21. Reliance was placed on the decision of the Jitendra Mansukhlal Adesara vs. Assistant Commissioner of Income Tax reported in [2021] 126 Taxman.com 150 (Guj.) wherein it is held by this Court that when the Assessing Officer is satisfied, the documents containing the details in the seized material from the searched person and such material pertains to the petitioner, it cannot be said that the mandatory requirements of section 153C of the Act have not been complied with.
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22. It was therefore, submitted that as per the mandate of section 153C of the Act, notice is required to be issued for 10 Assessment Years which would cover the Assessment Years 2011- 12 and 2012-13 even if after applying the decision in case of CIT vs. Jasjit Singh (supra).
23. Reliance was placed on the decision of the Hon'ble Apex Court in case of Commissioner of Income Tax vs. Vijay N. Chandrani [2013] 35 taxmann.com 580 (SC) wherein it is held that the petitioner is not entitled to invoke the writ jurisdiction of the High Court without exhausting alternative remedy provided under the Act and at the stage of issuance of notice, the High Court ought not to entertain the writ petition and instead should have directed the assessee to file reply to the notices and upon receipt of the decision from the Assessing Officer if for any reason it Page 21 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined was aggrieved by the said decision, to question the same before the Forum provided under the Act.
24. It was therefore, submitted that the impugned notices are issued after recording satisfaction by the Assessing Officer and the same cannot be said to be without jurisdiction.
25. Having heard learned advocates for the respective parties and considering the facts and material of the case, the questions which call for consideration are:
(1) Whether the impugned notices can be said to be time barred ?
(2) Whether the Assessing Officer would have no jurisdiction for the years for which, no incriminating material is found?Page 22 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024
NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined (3) Whether the Assessing Officer has assumed the jurisdiction by recording valid satisfaction to initiate the assessment proceedings under section 153C of the Act or not?
26. The provisions of Section 153C of the Act is required to be considered as per the decision of the Apex Court in case of CCIT vs. Calcutta Knitwears (supra) which was rendered in relation to section 158B of the Act for issuance of notices for the assessment of the block period and the CBDT Circular No. 24/2015 issued in relation to the assessment under section 153C of the Act in view of the such decision which reads as under:
"CIRCULAR NO.24/2016 [F.NO.278/M18C/ 140/2015/ITJ], DATED 31-12-2015
1.The issue of recording of satisfaction for the purposes of section 158BD/153C has been subject matter of litigation.Page 23 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024
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2. The Hon'ble Supreme Court in the case of M/s Calcutta Knitwears in its detailed judgment in Civil Appeal No. 3958 of 2014 dated 12-3-2014 [2014] 43 taxmann com 446 (SC) (available in NJRS at 2014-LL-03 12-51) has tad down that for the purpose of section 1SKBD of the Act, recording of a satisfaction note is a prerequisite and the satisfaction note must be prepared by the AO before he transmits the record to the other AO who has jurisdiction over such other person u/s 158BD. The Hon'ble Court held that "the satisfaction note could be prepared at any of the following stages:
(a) at the time of or along with the initiation of proceedings against the searched person under section 1S8BC of the Act; or
(b) in the course of the assessment proceedings under section 158BC of the Act; or
(c) immediately after the assessment proceedings are completed under section 153BC of the Act of the searched persona."Page 24 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024
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3.Several High Courts have held that the provisions of section 153C of the Act are substantially similar/parimateria w the provisions of section 158BD of the Act and therefore, the above guidelines of the Hon'ble SC, apply to proceedings u/s 153C of the IT Act, for the purposes of assessment of income of other than the searched person. This view has been accepted by CBDT.
4.The guidelines of the Hon'ble Supreme Court as referred to in para 2 above, with regard to recording of satisfaction note, may be brought to the notice of all for strict compliance. It is further clarified that even if the AO of the searched person and the "other person" is one and the same, then also he is required to record satisfaction as has been held by the Courts.
5.in view of the above, filing of appeals on the issue of recording of satisfaction note should also be decided in the light of the above judgment. Accordingly, the Board hereby directs that pending litigation with regard to recording of satisfaction Page 25 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined note under section 158BD/153C should be withdrawn/not pressed if it does not meet the guidelines laid down by the Apex Court."
27. In the facts of the case, the Assessing Officer of the searched person has recorded the satisfaction note on 31.03.2018 which is on the last date of the assessment proceedings of the searched person to be completed under section 153B of the Act and as such, it cannot be said that the satisfaction note recorded by the Assessing Officer of the searched person is contrary to the decision of the CCIT vs. Calcutta Knitwears (supra) or the Circular No. 24/2015 issued by the CBDT as it was on the same day on which, the assessment proceedings of the searched person ought to have been completed.
28. There is no provision in the Act prescribing the time limit to record the satisfaction by Page 26 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined the Jurisdictional Assessing Officer on receipt of the incriminating seized material from the Assessing Officer of the searched person. However, the Hon'ble Supreme Court in case of CIT vs. Jasjit Singh (supra) has considered the aspect of recording the satisfaction by the Jurisdictional Assessing Officer by holding that the period of six years would be reckoned in respect of which the returns were to be filed would be from the date of receipt of material by the Jurisdictional Assessing Officer. The Hon'ble Supreme Court after referring to the provisions of section 153A and 153C of the Act has held as under:
"8. In SSP Aviation (supra) the High Court inter alia reasoned as follows:-
"14. Now there can be a situation when during the search conducted on one person under Section 132, some documents or valuable assets or books of account belonging to some Page 27 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined other person, in whose case the search is not conducted, may be found. In such case, the Assessing Officer has to first be satisfied under Section 153C, which provides for the assessment of income of any other person, i.e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the Assessing Officer having jurisdiction over the other person. Thereafter, the Assessing Officer having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess or reassess the income of such other person in the, manner contemplated by the provisions of Section 153A. Now a question may arise as to the applicability of the second proviso to Section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period Page 28 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined of the six assessment years shall abate, is the date of initiation of the search under Section 132 or the requisition under Section 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other per- son, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or re- assessment to the six assessment years will be examined with reference to such date."
9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third Page 29 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined party (whose premises are not searched and in respect of whom the specific provision under Section 153- C was enacted. The revenue argued that the proviso [to Section 153(c) (1)] is confined in its application to the question of abatement.
10. This Court is of the opinion that the revenue's argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials of the search party, under Section 132 would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually "relate back" as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-
proportionate. For instance, if the Page 30 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined papers are in fact assigned under Section 153-C after a period of four years, the third party assessee's prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts."
29. In view of the above dictum of law, the period of six years to be computed would be from the date when the material was forwarded to the jurisdictional Assessing Officer which can be either 31.03.2018 or 02.04.2018 or 23.10.2019 and accordingly, the Assessment Years for which, the notices can be issued would be in first scenario from A.Y. 2012-13 to 2017-18, in the second scenario from 2013- 14 to 2018-19 and in third scenario from 2014-15 to 2019-20.
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30. However, as contended by the learned Senior Standing Counsel Mr. Patel for the Revenue that the period of 10 years is required to be reckoned as held by the Hon'ble Delhi High Court in case of Principal Commissioner of Income Tax vs Karina Airlines International Ltd.(supra), whether the incriminating material is received in either of the three scenarios, the Assessment Years 2011-12 and 2012-13 would be covered within the period of 10 years to be reopened under section 153C read with section 153A of the Act. The Hon'ble Delhi High Court has held in the said case as under:
"7. It becomes pertinent to note that as those provisions stood prior to Finance Act, 2017, the relevant assessment years which could be thrown open pursuant to a search stood at six assessment years. By virtue of Finance Act, 2017 the Page 32 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined block period for search assessment stood extended to ten assessments years on account of the introduction of the concept of "relevant assessment year or years". That expression came to be defined by Explanation 1 to Section 153A as extending to the period which falls beyond six assessment years but not later than ten assessment years from the end of the AY relevant to the previous year in which the search was conducted or requisition made xxxxx
9. As is manifest from the above, clause
(c) of that Proviso clearly stipulates that no notice for assessment or reassessment for the relevant assessment year or years could be issued if a search had been made prior to 01 April 2017. This is evident from the Second Proviso stipulating that the amended block period provision would get attracted only if the search had been initiated or requisition made on or after the first day of April 2017. Undisputedly Page 33 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined in the facts of the present case the search was conducted on 07 April 2016.
xxxxxx
14. It becomes pertinent to recall that Section 153A, as it stood prior to 01 April 2017, envisaged a search assessment being undertaken "in respect of each assessment year falling within six assessment years referred to in clause (b) thereof. Clause (b) of Section 153A(1) provided for the identification of the six AYs' with reference to the "previous year in which the search is conducted or requisition is made". The block of six AYs' were to be identified commencing from AO the AY "immediately preceding the assessment year relevant to the previous year"
in which the search may have been conducted. The Finance Act, 2017 stretched the search assessment to an additional four AYs' with the introduction of the concept of "relevant assessment year" and which was defined by Explanation 1 to Section 153A(1) as being the period Page 34 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined which would fall beyond "six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year" in which search was conducted. A block period of ten AYs' consequently became liable to assessment in the case of a search post the enactment of Finance Act, 2017.
15. The constitution of a block of ten AYs' in Section 153A was contemporaneously added and introduced in Section 153C. Post Finance Act, 2017, an assessment triggered by a search could thus hypothetically extend to a block period of ten years both in the case of a searched as well as a non- searched entity. In our opinion, the amendments introduced in Section 153C, and on which reliance was placed by Mr. Mann, were essentially intended to place both Sections 153A and 153C at par and for both statutory provisions being available to be invoked for the purposes of Page 35 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined assessment covering a block of ten Ays'.
16. It however becomes relevant to note that Section 153C applies equally to all non-searched entities and neither carves out an exception nor does it create a separate regime pertaining to a contingency where the AO of the searched and the non-searched entity are one and the same. If the submission of Mr. Mann were to be accepted, it would amount to the Court carving out an exception in respect of those cases where the jurisdictional AO of the searched and non-searched entity were the same. This would also lead and constrain the Court to restrict the application of the First Proviso to Section 153C (1) of the Act only to those cases where the AO of the non-searched entity be one different from that of the searched person. This would clearly amount to a reconstruction of Section 153C and creating an exception which the Legislature chose not to introduce.
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17. The First Proviso to Section 153C (1) has been consistently recognized as not being concerned merely with the aspect of abatement, which is spoken of in the Second Proviso to Section 153A (1) of the Act, but also to regulate the date from which the six- year period or the "relevant assessment year" insofar as the non- searched entity is concerned, is to be reckoned. This position has been consistently followed not just by this Court but also by the Supreme Court in Commissioner of Income Tax 14 vs. Jasjit Singh........
18. Insofar as the present appeal is concerned, on facts we find that while it is true that AO of the searched person as well as that of the respondent assessee was the same, undisputedly while in the case of the former, satisfaction was recorded on 29 March 2019, the AO in the case of the respondent assessee drew up a Satisfaction Note on 15 May 2019.
19. In order to appreciate the essential legislative objective underlying the Page 37 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined handover of material and formation of opinion by the AO of the non-searched entity, we would have to bear the following aspects in mind. We firstly take note of the fact that Section 153C would get triggered firstly upon the Assessing Authority of the searched entity identifying documents or material which are found to relate to a person other than the entity which was subjected to search. In such a contingency, that Assessing Authority is obligated to transmit the relevant material to the AO of the "other person". The AO of the non-searched entity is thereafter required to scrutinize the material so received and evaluate whether the same is likely to have an impact "on the determination of the total income of such other person..". This becomes evident from the plain text of Section 153C requiring the AO of the non-searched party being "satisfied that the books of account or documents or assets seized have a bearing on the determination of total income of such other person..".
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20. It thus becomes apparent that it is the satisfaction arrived at under Section 153C which constitutes the cornerstone of that provision and the primary ingredient for Section 153C being set into motion. In our considered opinion, the actual or physical act of transmission of documents is merely a step in aid of formation of opinion whether an assessment under Section 153C is liable to be initiated. It is in that sense merely a machinery provision put in place to enable the AO of the non-searched person to examine Page 39 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined whether an assessment is liable to be commenced under Section 153C of the Act. Thus, even in a case where the AO of the searched and the non- searched party be one and the same, it would be the formation of an opinion that the material is likely to "have a bearing on the determination of the total income.." which would constitute the core and the heart of Section 153C.
21. A harmonious interpretation of the main part of Section 153C and its Proviso lead us to hold that in cases where the jurisdictional AO is common, the commencement point would have to be construed as the date when the satisfaction is formed by the said AO with respect to such other person. In our considered view, even though there may not have been an actual exchange of material unearthed in the course of the search between two separate authorities, it would be the date when the AO records its satisfaction with respect to the non-
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31. From the above analysis of section 153C read with section 153A and its proviso carried out by the Hon'ble Delhi High Court, the period of 10 years is to be considered on the basis of harmonious interpretation of section 153C and its proviso to the effect that the commencement of initiation of the assessment proceedings is required to be considered from the date when the satisfaction is formed by the Assessing Officer of the petitioner. Therefore, applying the second proviso to section 153A which has come into effect by the Finance Act,2017 which is held to be clarificatory by the Hon'ble Apex Court in case of Vikram Sujit Kumar Bhatia (supra) , when the escaped assessment is more than Rs. 50 Lakh, the Page 41 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined extended period of 10 years would be applicable. Therefore, even if it is held that the satisfaction is recorded by the jurisdictional Assessing Officer on 23.10.2019, then 10 years would be computed as under applying provision of section 153C and read with section 153A and proviso and explanation thereto:
SR.NO. A.Y SR.NO. A.Y.
1 2018-19 6 2013-14
2 2017-18 7 2012-13
3 2016-17 8 2011-12
4 2015-16 9 2010-09
5 2014-15 10 2009-10
As the satisfaction was recorded on
23.10.2019, 1st Assessment Year to be
reopened would be Assessment Year 2018-2019 and the 10th Assessment year would be 2009-
10. Therefore, the impugned notice issued from the Assessment Year 2009-10 to 2014-15 would be valid notices applying the provision of section 153A of the Act by extended period of 10 years.
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32. The decision of the Hon'ble Delhi High Court in case of Indian National Congress vs. Dy.
Commissioner of Income Tax (supra)would be also applicable in the facts of the case wherein it is held as under:
"13. It would thus be wholly incorrect to read the First Proviso to Section 153C of the Act as constituting a bar of limitation or disabling the respondents from initiating assessment/reassessment for the entire block period of ten assessment years. Consequently, and in our considered opinion, the submission that the power to assess would stretch only up to AY 2017-18 is misconceived. In light of the plain language and text in which Section 153C is couched, we are of the considered opinion that the material gathered in the course of the search would have empowered and enabled the respondent to undertake an assessment for six assessment years immediately Page 43 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined preceding the assessment year pertaining to the previous year in which the search was conducted and would also extend to the four additional AYs' which would stand included by virtue of Explanation 1 to Section 153A of the Act. The aforesaid position cannot possibly be doubted bearing in mind Section 153C incorporating the phrase ".....and for the relevant assessment year or years referred to in sub-section (1) of section 153A".
For the purposes of understanding the meaning to be assigned to the expression relevant assessment year, we would have to necessarily travel back to Explanation 1 as placed in Section 153A. The submission, therefore, that Section 153C would only extend to six assessment years immediately preceding the AY relevant to the financial year in which the search took place is wholly untenable.
14. These aspects are in any case no longer res integra having been duly considered by this Court as well as Page 44 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined the Supreme Court right from the time judgment came to be rendered in SSP Aviation Ltd. vs. Deputy Commissioner of Income Tax8 and ending with the authoritative pronouncement of the Supreme Court in Commissioner Income Tax vs. Jasjit Singh. More importantly, the precedents rendered in the context of the First Proviso to Section 153C have unequivocally held the same not merely intended to deal with the subject of abatement but also determinative of the relevant date for the purposes of computation of the six or the ten assessment years as the case may be.... ... ... ...
15. Though not so articulated, it appears that the contention of the respondent not being entitled to travel beyond the six assessment years immediately preceding the assessment year pertaining to the year of search proceeds perhaps on their understanding of Section 153A of the Act having not been invoked. We presume that the invocation of Section 153A was Page 45 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined intended to refer to the Fourth Proviso as placed in that Section and which prescribes the conditions precedent for the purposes of the assessment or reassessment being undertaken for the four additional assessment years. For purposes of clarity, we extract the Fourth Proviso to Section 153A of the Act hereunder: -
―Provided also that no notice for assessment or reassessment shall be issued by the Assessing Officer for the relevant assessment year or years unless--
(a) the Assessing Officer has in his possession books of account or other documents or evidence which reveal that the income, represented in the form of asset, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more in the relevant assessment year or in aggregate in the relevant assessment years;
(b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and Page 46 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined
(c) the search under Section 132 is initiated or requisition under Section 132-A is made on or after the 1st day of April, 2017.
16. It must at the outset be noted that the Satisfaction Note which has been drawn in unambiguous terms, and more particularly in paragraph 140 thereof, recites that the AO was satisfied that this was a fit case for initiating proceedings under Section 153C read with Section 153A of the Act for AY 2014-15 to AY 2020-21. There is thus an explicit reference not only to Section 153A but also to the block of ten assessment years which were proposed to be made subject matter of the impugned proceedings. The submission, therefore, that Section 153A was not invoked is untenable.
xxxxx
20. The petitioner has woefully failed to establish that the material which forms the bedrock for recordal of satisfaction is not founded on any data, material evidence or documentation pertaining to AYs' 2014- 15, 2015-16 and 2016-17. In fact no submission in this respect was either addressed or iterated. We Page 47 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined note that the cumulative impact of the material which had been gathered in the course of the search and which was also duly noticed in the Satisfaction Note has also been collated in the form of a chart which stands extracted in the Section 142(1) notice dated 01 March 2024. The said chart is extracted hereinbelow: -
AY Amount in crores
2020-21 Rs. 12.70
2019-20 Rs. 348.78
2018-19 Rs.4.19
2017-18 Rs.6.27
2016-17 Rs.32.44
2015-16 Rs. 39.77
2014-15 Rs.79.72
As is manifest from the above, there is specific reference to unaccounted transactions pertaining to AYs 2014- 15, 2015-16 and 2016-17. The aforesaid chart correlates with the material which stands noticed and forms part of the Satisfaction Note. More importantly, the amounts identified as relevant to the AYs' in question ex facie meet the prerequisites set out in the Fourth Page 48 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined Proviso to Section 153A. We also take into consideration the indubitable fact that the cumulative figure attributed to income which has allegedly escaped assessment would stand at approximately INR 520 crores.
21. That then takes us to the argument of invocation of the Fourth Proviso to Section 153A. In our considered opinion, the Fourth Proviso mandates that the AO must have in his possession material which reveals that income exceeding INR 50 lakhs or more has escaped assessment in the relevant AY or AYs. Clauses (a),
(b) and (c) as placed in the Fourth Proviso thus constitute pre- conditions which must be found to be satisfied before an assessment or re-assessment exercise may come to be initiated for the entire block period of ten assessment years. As we view the computation exercise undertaken by the respondent and which stands represented in the Page 49 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined shape of the chart which has been extracted hereinabove, it is evident that the prescription of INR 50 lakhs in the aggregate stands duly satisfied. The aforesaid chart is itself based on the evidence taken note of in the Satisfaction Note and thus constituting material in the possession of the jurisdictional AO and forming the basis for formation of opinion. A reading of the Satisfaction Note also leads us to the irresistible conclusion that the escaped income as estimated would qualify the pre- conditions that stand constructed by virtue of the Fourth Proviso when viewed from the point of quantum as well as non- disclosure. Once the aforesaid position is accepted, it becomes apparent that the argument of limitation would disintegrate.
22. Another submission which was addressed by Dr. Singhvi was with respect to a combined Satisfaction Note having been prepared for all AYs in question without explicit reference Page 50 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined to year wise incriminating material and taking into consideration material that was gathered and collected in the course of four different searches. We find ourselves unable to sustain that submission bearing in mind the indubitable fact that Section 153C of the Act represents the power conferred upon the AO to commence a process of assessment or reassessment for a block period of ten assessment years in the maximum.
The procedure as prescribed
in Section 153C is part of a
distinct statutory regime pertaining to search assessments which came to be introduced in the Act by virtue of Finance Act, 2003 and intended to act as a substitute to the procedure which was otherwise envisaged under Chapter XIV-B.
23. For the purposes of invoking Section 153C of the Act it is incumbent upon the AO to be satisfied that the material gathered in the course of Page 51 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined the search and pertaining to the non-searched person would have a bearing on the determination of the total income of such other person either for six AYs' or for the relevant AY or AYs'. Since the provision itself requires and enables the AO to undertake an assessment for a block period of ten years, it would clearly not be incumbent upon it to draw separate or independent satisfaction notes for each AY. A composite Satisfaction Note would suffice the requirements of Section 153C of the Act provided it embody details of the material gathered in the course of the search and pertaining to the AYs forming part of the block as a whole. As long as the common Satisfaction Note includes sufficient particulars of the incriminating material relevant to the block of AYs', the same would, in our considered opinion, satisfy the statutory requirement as imposed by the Act. Singhad Technical Education Society as also the Page 52 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined decision of the Supreme Court in Principal Commissioner of Income Tax, Central-3 vs. Abhisar Buildwell P. Ltd10 speak of incriminating material being found and which may impact the estimation of income likely to have escaped assessment for a particular AY. As we read and go through the Satisfaction Note as well as the orders disposing of objections, it is manifest that the respondent has rested its decision on incriminating material found for AYs 2014-15, 2015-16, 2016-17 and stretching up to AY 2020-21.
24. The provision only requires the AO to be satisfied that the material collated and handed over is likely to have an impact on the total income for the relevant AY or AYs'.
While an assessment would
necessarily have to be made in
respect of each of the relevant AY or AYs', we find ourselves unable to read Section 153A or 153C as mandating separate Satisfaction Page 53 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined Notes being drawn for each assessment year. Our conclusion in this respect stands fortified from the language of Section 153A(1)
(a) which contemplates a notice being issued calling upon the person to furnish a return of income for each of the six AYs' 10 (2024) 2 SCC 433 or the relevant AY or AYs'. This too appears to suggest that while the notice could be composite and based on a common satisfaction note which encapsulates the incriminating material pertaining to the AYs' in question, it is only returns which must and mandatorily be filed separately.
25. Regard must be had to the indubitable fact that the Satisfaction Note merely forms the foundation for initiation of action and which would enable us to evaluate whether an opinion has been validly formed. As long as it rests on incriminating material which pertains to the AYs' in question, the same would qualify Page 54 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined the requirement of Section 153C. We deem it apposite to observe that while it would be imperative for the Satisfaction Note to refer to the material pertaining to the AYs' which are sought to be reopened, a consolidated Satisfaction Note clearly does not appear to be an anathema provided it rests on material which pertains to the AYs' which are sought to be reopened.
26. We in this respect also bear in mind the lucid explanation of the procedure liable to be adopted under Sections 153A and 153C as came to be enunciated by the Court in Commissioner of Income Tax (Central) -III Vs. Kabul Chawla11 "37. On a conspectus of section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:
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(i) Once a search takes place under section 132 of the Act, notice under section 153A(1) will have to be mandatorily issued to the person searched requiring him to file returns for six assessment years immediately preceding the previous year relevant to the assessment year in which the search takes place.
(ii) Assessments and reassessments
pending on the date of the
search shall abate. The total
income for such assessment years will have to be computed by the Assessing Officers as a fresh exercise.
(iii) The Assessing Officer will
exercise normal assessment
powers in respect of the six
years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the "total income" of the Page 56 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined aforementioned six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six assessment years "in which both the disclosed and the undisclosed income would be brought to tax".
(iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of the seized material."Page 57 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024
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(v) In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word "assess"
in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word "reassess" to the completed assessment proceedings.
(vi) In so far as the pending
assessments are concerned, the
jurisdiction to make the
original assessment and the
assessment under section
153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer.
(vii) Completed assessments can be interfered with by the Assessing Page 58 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined Officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.
xxxxxx
31. As would be evident from the aforesaid passages, the Court chose to adopt the principle of unreasonable delay in initiation of proceedings. It thus appears to have taken the position that as a long as proceedings are initiated within a reasonable period from the closure of assessment of the searched person, a failure to take ―immediate action would not be fatal to the assessment. It is thus evident that Calcutta Knitwears and the expression immediately after as Page 59 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined appearing therein has not been construed or understood as being an expression of inflexible hues. What appears to have been frowned upon is inordinate delay. The question of whether delay is inordinate and consequently warranting quashing of the assessment proceedings itself, would inevitably be a question of fact which would have to be answered in the facts and circumstances of each case. We would also and necessarily have to bear in consideration the scope, extent and complexity of the investigation and enquiry which may have preceded the initiation of proceedings under Section 153C. However, we find ourselves unconvinced to hold in favour of the petitioner on this score for reasons which follow.
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34. As is manifest from the above, while the Section 153C notice was issued on 07 March 2023, the Satisfaction Note appears to have been provided to the petitioner on 28 and 30 June Page 60 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined 2023. These writ petitions came to be preferred long thereafter on 19 March 2024. We take note of the statutory timeframes stipulated under Section 153B of the Act for completion of assessment proceedings and more particularly the Second and Third Proviso's which mandate assessment itself being completed within twelve months from the time when the books of account or material is handed over to the AO of the non-searched person. This would mean that in the present case and taking the date of handing over or recordal of satisfaction as constituting the date from which that period is liable to be reckoned, the assessment is liable to be completed by 31 March 2024."
33. In view of the above conspectus of law, decisions cited by the learned advocate for the petitioner are duly considered in the above decisions and hence they are not dealt with again.
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34. We are therefore of the opinion that the impugned notices cannot be said to be time barred considering the extended period of 10 years from the Assessment Year 2018-19 upto Assessment Year 2009-10 considering the previous year in which, considering the date of receiving books of accounts or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction being 24.10.2019 from the end of the Assessment Year relevant to the previous A.Y. 2019-20.
35. In view of the above, we answer the Issue No.1 in the negative that the notices are not time barred and therefore, the other two issues relating to the notices for the Assessment Years for which, no incriminating material is found and whether valid satisfaction was recorded by the Assessing Officer can be raised by the petitioner during the course of the assessment Page 62 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024 NEUTRAL CITATION C/SCA/22170/2019 CAV JUDGMENT DATED: 02/12/2024 undefined proceedings as the same would depend upon the facts to be considered by the Assessing Officer. The petition therefore, being devoid of any merit is accordingly dismissed. No order as to costs. Rule is discharged.
(BHARGAV D. KARIA, J) (D.N.RAY,J) JYOTI V. JANI Page 63 of 63 Uploaded by JYOTI V. JANI(HC00213) on Tue Dec 03 2024 Downloaded on : Tue Dec 03 21:44:49 IST 2024