Income Tax Appellate Tribunal - Bangalore
Deputy Commissioner Of Income Tax, ... vs Smt G Lakshmi Aruna, Bangalore on 6 March, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE - 'B' BENCH, BANGALORE
BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND
SHRI A.K.GARODIA, ACCOUNANT MEMBER
[M.P. No. 149/B/2016
(in ITA No. 1450/ (Bang) 2014)]
(Assessment year : 2011 - 12)
Shri Gali Janardhana Reddy,
No. 8, Ashoknagar, Havamabavi,
Suruguppa Road,
Bellary - 583101.
PAN. AFBPR9737D Appellant
Vs
The Deputy Commissioner of Income Tax ,
Central Circle - 1 (3),
Bangalore. Respondent
AND
[M.P. No. 152/B/2016
(in ITA No. 1457/(Bang) 2014)]
(Assessment years : 2011 - 12)
Smt. G. Lakshmi Aruna,
No. 8, Ashoknagar, Havamabavi,
Suruguppa Road,
Bellary - 583101.
PAN. AFJPA5974P Appellant
Vs
The Deputy Commissioner of Income Tax,
Central Circle - 1 (3),
Bangalore. Respondent
Assessee by : Shri Mayank Jain, Advocate
Revenue by : Shri K. V. Arvind, Senior Standing Counsel
Date of hearing : 05-01-2018
Date of pronouncement : 06-03-2018
ORDER
PER BENCH:
These two M. Ps. are filed by the revenue alleging certain apparent mistakes in two separate tribunal orders passed in the cases of these two different but 2 M. P. Nos. 149 & 152/(Bang)2016 (in ITA Nos. 1450 & 1457/Bang/2014) connected assessees. These two M. Ps. Were heard together and are being disposed by way of this common order for the sake of convenience.
2. The common contention raised by the revenue in both these M. Ps. is this that the Assessment Year 2011 - 12 in both these cases is pertaining to Financial year in which, the search was carried out and no proceedings can be initiated u/s 153A or 153C in respect of this year and therefore, there is apparent mistake in both these tribunal orders in respect of this year because in these two tribunal orders, it was held that the assessment order for this year also along with the orders for six preceding years are bad in law and were quashed for this reason that the A. O. has not recorded satisfaction as required u/s 153C in his capacity of A.O. of the searched person.
3. Learned DR of the revenue has made written submissions before us. In the same, it is submitted that the search has taken place u/s 132 on 25.10.2010 in the case of Shri K. Raghavacharyulu and proceedings u/s 153C were initiated in these two cases for A. Ys. 2005 - 06 to 2010 - 11 but the assessment proceedings for A. Y. 2011 - 12 i.e. the year of search were completed u/s 144 r.w.s. 153D of I T Act. It is submitted that setting aside the assessment for this year on this basis that satisfaction u/s 153C was not recorded by the A.O. of the searched person is an apparent mistake and it should be rectified u/s 254 (2) of I T Act. Reliance has been placed on a judgment of Hon'ble Delhi High Court rendered in the case of SSP Aviation Ltd. as reported in 346 ITR 177 and in particular, Para 14 of this judgment was reproduced in the written submissions. We also reproduce the written submissions filed by the learned DR of the revenue for ready reference. This reads as under:-
"1. Search under section 132 was conducted on 25/10/2010 in the case of Shri.K.Raghavacharyulu. Pursuant to the search, proceedings under section 153C of the Act were initiated in the case of the assessee for the Assessment Year 2005-06 to 2010-11 after recording satisfaction required under section 153C of the Act. Assessments were completed under section 153C of the Act for the Assessment Year 2005-06 to 2010-11. The Assessment Year 2011-12 being the year of search, assessment proceedings were completed under section 144 r.w.s 153D of the Act.3 M. P. Nos. 149 & 152/(Bang)2016
(in ITA Nos. 1450 & 1457/Bang/2014)
2. The assessment orders for Assessment Year 2005-06 to 2011-12 was subject matter of appeal before the Commissioner of Income Tax - Appeals. The assessee being aggrieved against the order of Appellate Commissioner preferred appeals before this Hon'ble Tribunal for Assessment Year's 2005-06 to 2011-12. This tribunal by common order dated 17/10/2016 setaside the assessment orders for the Assessment Year's 2005-06 to 2011-12 on the ground that satisfaction under section 153C of the Act was not recorded by the Assessing Officer of the searched person. The assessment for the Assessment Year 2011-12 was regular assessment and no proceedings were initiated under section 153C of the Act. Hence setting aside of the assessment for the Assessment Year 2011-12 on the ground that satisfaction under section 153C of the Act was not recorded by the Assessing Officer of the searched person was mistake apparent on the record. The above petition has been filed seeking rectification of the above mistake and to consider the same on merits.
3. Section 153A(1)(b) of the Act provides for assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such searches conducted requisition is made. The date of search relevant for the present case is 25/10/2011 and Assessment Year 2011-12 relevant to the financial year in which search was conducted is excluded for the purpose of computing six assessment years in terms of section 153A(1)(b) of the Act.
4. First proviso to Section 153A of the Act provides for assess or reassess the total income in respect of each assessment year falling within such six assessment years. The reference to "such six assessment years" is with reference to 6 assessment years referred to in section 153A(1)(b) of the Act.
5. Second proviso to section 153A of the Act provides for abatement of pending assessments as on the date of search. The effect of the second proviso is that any assessment pending as on the date of search with reference to 6 assessment years referred to in 153A(1)(b) of the Act would get abated.
6. Section 153C of the Act provides for assessment in the case of other person and issue of notice and assess or reassess the income of the other person in accordance with the provisions of section 153A of the Act subject to conditions contemplated therein.
7. First proviso to section 153C of the Act refers to second proviso of section 153A(1) of the Act for determination of abatement of assessments in the case of proceedings being initiated under section 153C of the Act. The date of search for the purpose of abatement referred to in section 153A of the Act is provided to be the date of 4 M. P. Nos. 149 & 152/(Bang)2016 (in ITA Nos. 1450 & 1457/Bang/2014) receiving the books of account or documents or asset seized or requisitioned by the Assessing Officer having jurisdiction over such other person. The effect of the first proviso is that the assessments pending in respect of the six assessment years referred to in section 153A(1)(b) of the Act would get abated on the day of receipt of books of accounts or documents or asset seized by the Assessing Officer having jurisdiction over such other person.
8. On a combined reading of section 153A(1)(b), first and second proviso to section 153A of the Act, Section 153C and the first proviso to section 153C of the Act would mandate that period of six assessment years for the purposes of section 153A and 153C of the Act is one and the same and would not alter in respect of both the provisions. The above understanding is further strengthened by the language of section 153C(1) of the Act wherein issue of notice and assess or reassess the income of the other person in accordance with the provisions of section 153A of the Act is provided. Even if the proceedings under section 153C of the Act are initiated, the procedure is contemplated under section 153A of the Act. In view of the above, period of six assessment years for the purpose of section 153A of the Act referred to in clause (b) to section 153A(1) of the Act would equally apply to section 153C of the Act.
9. The above issue has been considered by the Delhi High Court in the case of SSP aviation Ltd 346 ITR 177 wherein at para-14 held as under: --
"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 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 5 M. P. Nos. 149 & 152/(Bang)2016 (in ITA Nos. 1450 & 1457/Bang/2014) year within the period 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 person, 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 reassessment to the six assessment years will be examined with reference to such date."
10. The reliance of the assessee on the judgement of the Delhi High Court in the case of RRJ securities Ltd is incorrect and the same has not dealt with the proposition canvassed above. The Delhi High Court has not considered the limited purpose of second proviso to section 153A and first proviso to section 153C of the Act, which mandates the point of abatement with respect to period of six assessment years referred to in section 153A(1)(b) of the Act. Further the Delhi High Court has not considered the implication of reference made to section 153A of the Act in section 153C of the Act enabling issue of notice and assess or reassess the income of the other person in accordance with the provisions of section 153A of the Act.
11. Further the Delhi High Court has not specifically held that the period of six assessment years would be different for the purpose of section 153A and 153C of the Act.
12. Assuming without admission if the contention of the assessee that period of six years has to be recorded with reference to the date of receiving the books of account or documents or asset seized or requisitioned by the Assessing Officer having jurisdiction over such other person, the same would amount to rewriting of section 153C of the Act which is specifically disapproved by Apex Court and various High Courts.
13. If the contention of the assessee is to be analysed, that proceedings under section 153C of the Act can be initiated on the Assessing Officer being 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 of the Act From reading of the above provision it is clear that proceedings can be initiated under section 153C of the Act on the basis of the above material found in the searched premises belonging to the other person. Proceedings under section 153C of the Act would always be post search under 6 M. P. Nos. 149 & 152/(Bang)2016 (in ITA Nos. 1450 & 1457/Bang/2014) section 132 of the Act in the case of the searched person. When the searched person is subjected to proceedings under section 153A of the Act with respect to 6 assessment years relevant to previous year in which search is conducted, proceedings initiated under section 153C being on the basis of the material found belonging to the other person in the course of search, the period of six assessment years cannot be after the six assessment years of the searched person or period after the date of search. In any event in view of the specific language of section 153A and 153C of the Act, the period of proceedings under section 153A and 153C of the Act would not and shall not cover beyond the period excluding the financial year in which search is conducted. In other words the other person under section 153C of the Act cannot be placed in a worse/disadvantage position than the person subjected to search under section 132 of the Act and where the proceedings under section 153A of the Act being initiated.
14. Without prejudice to the above contentions, it is submitted that the issue of the period of six assessment years for the purposes of section 153C of the Act being the fresh ground raised in the course of hearing of the Miscellaneous Petition, the same cannot be entertained. Even if such a fresh ground is to be examined by this Hon'ble Tribunal, the order dated 17/10/2016 requires to be recalled and the fresh ground has to be examined in the appeal on restoration. Consideration of the fresh ground in the application under section 254(2) of the Act that to especially in the application filed by the revenue would be beyond the jurisdiction of this Hon'ble Tribunal.
15. Without prejudice to the above contentions, for the sake of argument if the contention of the assessee is to be accepted, the reasons assigned by this Hon'ble Tribunal in the common order dated 17/10/2016 for the Assessment Year 2005-06 and 2006-07 would be incorrect and contrary to the stand taken by the assessee.
Wherefore, it is respectfully prayed that this Hon'ble Tribunal may be pleased to allow the Miscellaneous Petition, restore the appeal for the Assessment Year 201112 and adjudicate the matter on merits in the interest of justice and equity."
4. It is also submitted that the reliance placed by the learned AR of the assessee on a judgment of Hon'ble Delhi High Court rendered in the case of CIT vs. RRJ Securities Limited as reported in 380 ITR 612 is incorrect because in that case, the limited issue under consideration was second proviso to section 153A and first proviso to section 153C in respect of point of abatement. It is also submitted that Hon'ble Delhi High Court has not specifically held that the period 7 M. P. Nos. 149 & 152/(Bang)2016 (in ITA Nos. 1450 & 1457/Bang/2014) of six assessment years would be different for the purpose of section 153A & 153C of I T Act.
5. One more submission is made by the learned DR of the revenue that under section 153C, the satisfaction to be recorded by the A.O. of the searched person is this that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs to a different person. It is submitted that admittedly, the period of six years as per the provisions of section 153A in respect of the searched person is six years relevant to the preceding years of the search year. He submitted that how the said period of six years can include any period after the said six years including the period after the date of search. The last contention raised is this that the issue in respect of period of six assessment years for the purpose of section 153C is a fresh ground and it cannot be raised in the M. P. Proceedings u/s. 254 (2).
6. Learned AR of the assessee has placed reliance on a judgment of Hon'ble Delhi High Court rendered in the case of CIT vs. RRJ Securities Limited as reported in 380 ITR 612 and submitted that as per this judgment, the six assessment years for which assessments/reassessments could be made under Section 153C of the Act have to be construed with reference to the date of handing over of assets/documents to the AO of the Assessee. In this regard, he has drawn our attention to Para 5.1 of this judgment in respect of facts of that case and paras 23 & 24 in respect of the decision. Hence, we reproduce these paras for the sake of ready reference. The same are as under:-
"5.1 Search and seizure operations were undertaken under Section 132 of the Act in the case of Sh. B.K. Dhingra, Smt. Poonam Dhingra and M/s Madhusudan Buildcon Pvt. Ltd. (hereafter also referred to as 'searched persons') on 20th October, 2008. Certain documents belonging to the Assessee Company and a computer hard disk containing soft copies of working papers, balance sheets and data for income tax filings, were seized during the search. The AO of the searched persons recorded a 'Satisfaction Note' on 8th September, 2010 to the effect that the documents seized and the data contained in the hard disk belonged to the Assessee and, hence, 8 M. P. Nos. 149 & 152/(Bang)2016 (in ITA Nos. 1450 & 1457/Bang/2014) Section 153C was invokeable. On the aforesaid basis, proceedings were initiated under Section 153C and a notice dated 8th September, 2010 for the AYs 2003-04 to 2008-09 was issued to the Assessee.
23. In the present case, the Assessee had claimed that the assessments for the concerned assessment years were not pending on the date of recording of satisfaction by the AO and, therefore, would not abate by virtue of the second proviso to Section 153A of the Act. Further, the period of six years would also have to be reckoned with respect to the date of recording of satisfaction note - that is, 8th September, 2010 - and not the date of search.
24. As discussed hereinbefore, in terms of proviso to Section 153C of the Act, a reference to the date of the search under the second proviso to Section 153A of the Act has to be construed as the date of handing over of assets/documents belonging to the Assessee (being the person other than the one searched) to the AO having jurisdiction to assess the said Assessee. Further proceedings, by virtue of Section 153C(1) of the Act, would have to be in accordance with Section 153A of the Act and the reference to the date of search would have to be construed as the reference to the date of recording of satisfaction. It would follow that the six assessment years for which assessments/reassessments could be made under Section 153C of the Act would also have to be construed with reference to the date of handing over of assets/documents to the AO of the Assessee. In this case, it would be the date of the recording of satisfaction under Section 153C of the Act, i.e., 8th September, 2010. In this view, the assessments made in respect of assessment year 2003-04 and 2004-05 would be beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, would be contrary to the scheme of Section 153C(1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized 9 M. P. Nos. 149 & 152/(Bang)2016 (in ITA Nos. 1450 & 1457/Bang/2014) assets/documents on search of the Assessee; the seized assets/documents belonging to a person other than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying the provisions of Section 153A of the Act. We, therefore, accept the contention that in any view of the matter, assessment for AY 2003-04 and AY 2004-05 were outside the scope of Section 153C of the Act and the AO had no jurisdiction to make an assessment of the Assessee's income for that year."
7. We have considered the rival submissions. We find force in the submissions of the learned AR of the assessee because we find that the judgment cited by the learned AR of the assessee is a later judgment being dated 30.10.2015 and the judgment cited by the learned DR of the revenue is dated 29.03.2012. This judgment cited by the learned DR of the revenue having been rendered in the case of SSP Aviation Ltd. (Supra) was considered by Hon'ble Delhi High Court in the later judgment rendered in the case of CIT vs. RRJ Securities Limited (Supra) on which, reliance has been placed by the learned AR of the assessee. In this case also, this contention was raised by the revenue before Hon'ble Delhi high court that the relevant six assessment years would be the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. But this was held by Hon'ble Delhi High court that if this interpretation as canvassed by the revenue is accepted, it would mean that whereas in the case of a person searched, the reopening will be for six years being prior to year of search but in case of the other person who was not searched but his assets were seized from the searched person, the period for which the assessment could be reopened would be much beyond the period of six years from the date of handing over of the assets/documents.
8. In the present case, although the search has taken place on 25.10.2010 but the satisfaction note was recorded on 14.12.2012, (relevant to A. Y. 2013 - 14) by the AO of the assessee in his capacity of AO of this assessee and not in the capacity of the AO of the searched person although the AO is same of this assessee and of the searched person as noted by the tribunal in Para 7 of the 10 M. P. Nos. 149 & 152/(Bang)2016 (in ITA Nos. 1450 & 1457/Bang/2014) tribunal order in the case of Shri Gali Janardan Reddy in ITA Nos. 1444 to 1450/Bang/2014 dated 17.10.2016 and in Para 3 of the tribunal order in the case of Smt. G. Lakshmi Aruna in ITA Nos. 1451 to 1457/Bang/2014 dated 18.10.2016. Hence, as per this judgment of Hon'ble Delhi high Court, the relevant six years in these two cases for section 153A/153C are A. Y. 2007 - 08 to 2012 - 13. Hence, the present assessment year 2011 - 12 is also covered by section 153A/153C and therefore, there is no apparent mistake in these two tribunal orders.
9. Regarding this contention of the learned DR of the revenue raised in Para 14 of the written submissions reproduced above that the issue of the period of six assessment years for the purpose of section 153C of the Act is a fresh ground raised by the learned AR of the assessee raised in the course of hearing of the M. P., we find that this is not a fresh ground raised by the learned AR of the assessee raised in the course of hearing of the M. P. In fact, this is the ground raised by the revenue in these M. Ps. that the present year cannot be a part of six years covered u/s 153C and in reply thereto, the learned AR of the assessee has placed reliance on the judgment of Hon'ble Delhi High Court rendered in the case of CIT vs. RRJ Securities Limited (Supra) and it was contended that as per this judgment, the present assessment year 2011 - 12 is also covered by section 153A/153C and therefore, there is no apparent mistake in these two tribunal orders. Hence, this contention is also not rendering any help to the revenue.
10. In the light of above discussion, we find that there is no merit in these two M. Ps. of the revenue and therefore, respectfully following this judgment of Hon'ble Delhi High Court rendered in the case of CIT vs. RRJ Securities Limited (Supra), we hold that the present assessment year 2011 - 12 is also covered by section 153A/153C in the facts of the present case and therefore, there is no apparent mistake in these two tribunal orders.
11 M. P. Nos. 149 & 152/(Bang)2016(in ITA Nos. 1450 & 1457/Bang/2014)
11. In the result, both the M. Ps. of the revenue are dismissed.
Order pronounced in the open court on the date mentioned on the caption page.
Sd/- Sd/-
(SUNIL KUMAR YADAV) (A.K. GARODIA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Bangalore
D a t e d : 06.03.2018
*MS
Copy to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT, Bangalore.
6. Guard file
By order
Senior Private Secretary,
Income Tax Appellate Tribunal,
Bangalore.