Income Tax Appellate Tribunal - Delhi
Commitment Mortality Vision Education ... vs Acit, Central Circle- 6, New Delhi on 29 June, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: 'B', NEW DELHI
BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER
AND
SH. O.P. KANT, ACCOUNTANT MEMBER
ITA Nos.3980 & 3981/ Del/ 2017
Assessm en t Year s: 2007-08 & 2011-12
M / s. Com m itm en t M or t alit y Vs. ACIT,
Vision Edu cat ion Societ y, CC-6, New Delh i
C/ o- Kapil Goel, Adv., F-
26/ 124, Roh ini, New Delh i
PAN :AAAAC1679A
(Appellant) (Respondent)
Appellan t by Sh. Kapil Goel, Adv.
Respon dent by Sh. Rach na Singh, CIT(DR)
Dat e of h ear in g 28.05.2018
Dat e of pr on ou ncem ent 29.06.2018
ORDER
PER O.P. KANT, A.M.:
These t wo appeals by t h e assessee ar e dir ect ed against two separ at e or ders, bot h dated 31/ 03/ 2017 passed by t h e Ld. Com m ission er of Incom e-t ax (Appeals)-25, Delh i [in sh or t t he Ld. CIT(A) ] for assessm en t year 2007-08 an d 2011-12 r espectively. In th ese appeals com mon gr ou n ds h ave been r aised in sim ilar set of facts an d circu m st ances, an d th er efor e, bot h t h ese appeals wer e h ear d t oget h er and disposed of by way of th is consolidated or der for t he sak e of convenien ce an d br evit y.
2. The gr ou n ds of appeal r aised in ITA No. 3980/ Del/ 2017 for assessm ent year 2007-08 ar e r epr odu ced as u n der :
2ITA No.3980 & 3981/Del/2017 Jurisdictional Ground: Proceedings u/s 153C are void ab initio.
1. That as per proviso to section I53C, 6 years have to be reckoned from date of recording of satisfaction note i.e. 10.03.2014 which falls in F.Y. 2013-14 i.e. A.Y. 2014-15 accordingly preceding six years i.e. A.Y. 2008-09 to 2013- 14 can only be assessed u/s 153C and present assessment framed u/s 153C for A. Y. 2007-08 is time barred, illegal, void-ab-initio and requires to be declared as nullity.
2. That as per documents described in beginning of the order (Para 2) which are purportedly seized from search operation on another person, same as replied to AO during assessment are duly disclosed and do not give rise to any undisclosed income duly objected before AO (reply dated 11/12/2014 disposed on 16/12/2014), and sans any undisclosed income emanating out of seized documents which is further fortified from final order where none of the addition has any semblance with seized documents, accordingly, notice issued u/s 153C, order passed u/s 153C and Id CIT-A order all becomes bad in law and requires to be quashed.
3. That purported satisfaction note recorded on 25/03/2014 is not valid in eyes of law as same does not meet the mandatory criteria stipulated u/s 153C of the Act;
4. That notice issued u/s 153C, order passed u/s 153C and subsequent order passed by Ld CIT-A are all bad in law for want of jurisdiction and requires to be quashed.
On Merits
5. That without appreciating mandatory jurisdictional requirement of presence of incriminating material, addition is made by the Ld AO in assessment order which is mechanically confirmed by CIT-A without adverting to inundated binding jurisprudence available on the subject, which addition without having any linkage with search based "incriminating" material, requires to be deleted in limine.
6. That Id. CIT-A made manifest error of law and facts in sustaining the addition made by Ld AO in impugned order 3 ITA No.3980 & 3981/Del/2017 which suffers from serious debility and is not in accordance with law and is arbitrary, invalid and unsustainable in eyes of law.
7. That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal.
2.1 The gr ou n ds of appeal r aised in ITA No. 3981/ Del/ 2017 for assessm ent year 2011-12 ar e r epr odu ced as u n der :
Jurisdictional Ground: Proceedings u/s 153C are void ab initio
1. That as per documents described in beginning of the order (Para 2) which are purportedly seized from search operation on another person, same as replied to AO during assessment are duly disclosed and do not give rise to any undisclosed income duly objected before AO (reply dated 11/12/2014 disposed on 16/12/2014), and sans any undisclosed income emanating out of seized documents which is further fortified from final order where none of the addition has any semblance with seized documents, accordingly, notice issued u/s 153C, order passed u/s 153C and Id CIT-A order all becomes bad in law and requires to be quashed.
2. That purported satisfaction note recorded on 25/03/2014 is not valid in eyes of law as same does not meet the mandatory criteria stipulated u/s 153C of
3. That notice issued u/s 153C, order passed u/s 153C and subsequent order passed by Ld CIT-A are all bad in law for want of jurisdiction and requires to be quashed.
On Merits
4. That without appreciating categorical reply of assessee where it is plainly denied that the assessee is not in effective receipt of any amount from Fiitjee group which stand was taken before Id CIT-A also as noted in impugned order, the confirmation of addition of Rs 23,59,65,731/- is arbitrary and invalid being bereft of legally sustainable grounds.
5. That without appreciating mandatory jurisdictional requirement of presence of incriminating material, addition is 4 ITA No.3980 & 3981/Del/2017 made by the Ld AO in assessment order which is mechanically confirmed by CIT-A without adverting to inundated binding jurisprudence available on the subject, which addition without having any linkage with search based "incriminating" material, requires to be deleted in limine.
6. That Id CIT-A made manifest error of law and facts in sustaining the addition made by Ld AO in impugned order which suffers from serious debility and is not in accordance with law and is arbitrary, invalid and unsustainable in eyes of law.
7. That the appellant craves leave to add add/alter any/all grounds of appeal before or at the time of hearing of the appeal
3. Br iefly st at ed facts of t h e case ar e t h at a sear ch and seizu r e act ion u nder sect ion 132 of t h e Incom e-t ax Act , 1961 (in sh or t t h e Act ) was car r ied ou t in t h e case of Investigat ion Wing of In com e-tax D epar t m ent , New Delh i on 17/ 12/ 2012 and sim u lt aneou sly, a su r vey u n der sect ion 133A of th e Act was car r ied ou t by t he Invest igation Win g of t h e In com e Tax Depar t m en t at th e pr em ises of t he assessee t r u st/ societ y sit u at ed at 2D, MIG flat s, Gu labi Bagh , Delh i. In t h e sear ch act ion at th e pr em ises of t h e have been seized. Th e Assessin g Officer in t h e case of JEE Ltd. r ecor ded h is satisfact ion t h at t h ose r elevant docu m en ts belon ged to t he assessee. Consequ ent ly, t h e Assessin g Officer init iat ed pr oceedin gs u / s 153C of t he Act an d issu ed n ot ice u n der sect ion 153A r ead wit h sect ion 153C of th e Act on 25/ 03/ 2014 ask in g t h e assessee to file th e r et u r n of in com e for assessm ent year 2007-08. For assessm en t year 2011-12, also sim ilar pr oceedin gs u / s 153C 5 ITA No.3980 & 3981/Del/2017 wer e in it iated an d a n otice u n der sect ion 153A r ead wit h Sect ion 153C of th e Act was issu ed on 25/ 03/ 2014. The assessee did n ot com ply wit h t h e said n ot ices an d t h er efor e, t h e Assessing Officer issu ed notices u n der sect ion 142(1) of t h e Act on 12/ 08/ 2014, r equ est in g to t h e assessee to com ply t he n ot ice u nder sect ion 153A r ead wit h Sect ion 153C of t h e Act . On 20/ 08/ 2014, t h e assessee sou ght for exten sion for filin g t h e r et u r n of in com e. Th e assessee did n ot com ply an d, th er efor e, th e Assessin g Officer again issu ed n otices u n der section 142(1) of t he Act on t h r ee m or e occasion s i.e. 22/ 08/ 2014; 07/ 10/ 2014 an d 12/ 11/ 2014 r equ estin g the assessee t o file t h e r etu r n of in com e. Finally on 08/ 12/ 2014 i.e., after a lapse of m or e t h an 7 m on t h s, t h e assessee filed r et u r n of incom e for both t he assessm en t year s in volved. Alon g with t h e r et u r n s, t h e assessee also filed r evised balan ce sheet and r evised incom e an d expen dit u r e accou n t. Not ices u n der sect ion 143(2) of th e Act wer e issu ed in bot h assessm en t year s on 12/ 12/ 2014. The object ions r aised by t h e assessee against pr oceeding u n der sect ion 153C of th e Act wer e disposed of by th e Assessing Officer an d com m u n icated t o th e assessee in wr it in g vide let t er dat ed 16/ 12/ 2014. All t he docu m en t s seized fr om t h e pr em ises of t he Gr ou p h ad also been alr eady pr ovided t o th e assessee. The assessee did n ot com ply with t he qu er ies of th e Assessin g Officer an d r epeatedly r aised object ion s again st t h e pr oceedings u n der section 153C of th e Act an d sou gh t adjou r nm en t on on e or oth er pr et ext .
3.1 The Assessin g Officer brou gh t t o t h e k nowledge of t h e assessee th at t h e stat em en t of Sr i Aseem Gu pt a, Cont r oller of t he assessee society, wher ein h e adm itt ed t hat a ban k accou nt was 6 ITA No.3980 & 3981/Del/2017 open ed an d oper at ed in n ar a ban k in t h e n am e of t he assessee by th e dir ector s of r ou p . Sh . Aseem Gu pt a fu r th er adm it t ed t hat t h e assessee tr u st (societ y) was u sed as a con du it for r ot at ing cer tain fu n ds of t h e rou p . Sh. Aseem Gu pt a fu r t h er adm it ted th at in lieu of m ak ing th e t r u st (societ y) available for r ot atin g t h e fu nds by th e r ou p , h e was allott ed stat u tor y au dit wor k of th e fou r con cer n s of t he FIITJ EE Gr ou p and h e r eceived Rs.60,000 as au dit fee fr om th ese con cer n s. In view of t h ese fact s, t h e Assessin g Officer obser ved th at sanctit y of t h e object ive of t h e societ y was th or ou gh ly violat ed for per sonal ben efit by Sr i Aseem Gu pt a as it was don e against t h e con sider at ion in th e for m of stat u tor y au dit of assessee as given t o h im . Th e Assessing Officer also obser ved t hat t h e am ou n t r eceived as don at ion fr om th e pr om oters of rou p was n ot u sed for ch ar it able act ivit ies and t h u s t h er e was m isu se in t h e applicat ion of t he in com e of t h e societ y. In assessm en t year 2011- 12, t h e Assessin g Officer h as br ou ght on r ecor d com plet e plan n in g of t h e don ation fr om t he assessee to th e JEE Gr ou p , wh ich was m ade by t h e J EE au t h or it ies. Th e said plan n in g in clu des dr aft let ter s of cor r espon den ce bet ween the assessee an d FIITJ EE as well as don ors. In th e assessm en t or der for t h e AY:
2011-12, t he Assessin g Officer h as not ed th at a su m of Rs.23,59,65,731/ -was r eceived as don at ion for ch ar it able pu r poses an d in st ead of applyin g t h e sam e for ch ar it able act ivities, th e assessee passed on t he en t ir e su m t o FIITJ EE Gr ou p , wh ich r esu lt ed in dir ect ben efit to t h at com pan y. 3.2 The Assessin g Officer con clu ded t hat the assessee societ y/ t r u st h as n ot sh own an y eviden ce t h at t h e said com pan y 7 ITA No.3980 & 3981/Del/2017 i.e. J EE , car r ied ou t ch ar it able act ivities du r in g th e year u n der consider ation an d, h en ce, assessee societ y was held t o have con tr aven ed t he pr ovision s r elat in g t o applicat ion of in com e for ch ar it able pu r pose an d accor din gly, t he ben efit u n der sect ion 11 and section 12 of th e Act was den ied t o t he assessee and t h e assessee societ y was assessed as in associat ion of per sons (AOP) as provided u nder sect ion 167 of th e Act.
3.4 In assessm en t year 2007-08, t he expen ses of Rs.2,56,132/ -
claim ed u n der t he incom e and expendit u r e st at em en t h ave been accor din gly disallowed an d t h e tot al in com e h as been assessed at Rs.2,57,620/ - vide or der dat ed 23/ 03/ 2015. 3.5 Sim ilar ly, in assessm en t year 2011-12, t he Assessing Officer disallowed am ou n t of don at ion paid of Rs.23,59,65,731/ - an d assessed t he tot al in com e at Rs.23,59,56,850/ - vide or der dat ed 23/ 03/ 2015.
3.6 Aggr ieved, th e assessee filed appeal befor e t h e Ld. CIT(A) in both th ese assessm en t year s an d ch allen ged t h e assessm en t bot h on t h e legalit y in assu m ing ju r isdict ion as well as on m er it. In bot h th e assessm en t year s, t h e Ld. CIT(A) r eject ed t he appeal of t h e assessee, holdin g th at t h e assessee had been u n able t o ju stify an y of t h e gr ou n ds of t he appeal. Th e r elevan t fin din g of t h e Ld. CIT(A) in assessm en t year 2007-08 is r eprodu ced as u n der :
"8.5 Reply dated 27.02.2017 was submitted by the Appellate which is reproduced above in Para 7.2. It is seen that the Appellant has adopted evasive tactics and has not given the complete information/details etc. Thereafter, several opportunities were given to the Appellant but it could not justify the Grounds of Appeal raised by it. A perusal of the entire facts of the case, particularly with 8 ITA No.3980 & 3981/Del/2017 reference to the appeal of the appellant for AY 2011-12, show that the Appellant has been involved in the receipts and payments on its own behalf and on behalf of M/s. FIITJEE Ltd. and the Directors and other persons associated with the FIITJEE Group. The appellant was provided repeated opportunities to come out with the full facts of the case, but the Appellant kept on giving evasive replies.
8.6 It is thus seen that many discrepancies and differences were pointed out to the Appellant and opportunities were given for it to explain the case, through various Order Sheet entries and opportunities in the appellate proceedings. However, the Appellant has not come out with clean hands even at this stage. Though it was repeatedly claimed by the Appellant that the FIITJEE Group was controlling the Bank Account and the unexplained transactions, but the appellant did not give complete evidence against M/s. FIITJEE Ltd., and despite repeated opportunities did not specify the particular individuals of the FIITJEE Group who were involved in making the transactions through the Bank Accounts of the Appellant.
8.7 The Appellant has claimed various expenses towards claimed charitable activities and towards Administrative expenses for the year under consideration. The Ld. Assessing Officer has made additions to the Income after giving proper and repeated opportunities to the Appellant.
8.8 The Appellant has been unable to justify any of the Grounds of appeal and hence, these are rejected. The Appellant was unable to show that any relief was due and hence no relief can be granted to the Appellant."
3.7 Sim ilar ly, in assessm en t year 2011-12, t h e r elevant fin din g of th e Ld. CIT(A) ar e r epr odu ced as u nder :
9ITA No.3980 & 3981/Del/2017 "8.13 A perusal of the entire facts of the case show that the Appellant has been involved in the receipts and payments on its own behalf and on behalf of M/s FIITJEE Ltd. and the Directors and other persons associated with the FIITJEE Group. The Appellant was provided repeated opportunities to come out with the full facts of the case, but the appellant kept on giving evasive replies.
8.14 It is seen that the Appellant was involved in the design to defraud the Revenue, and now when the scheme has been exposed, has sought to claim that the Appellant itself had no control over the matters. It is seen that the Bank Account belonged to the Appellant, but it was claimed by the Appellant that the Bank Account was operated by-
persons of the FI1TJEE Group. The Appellant was required to specify the exact persons involved and to explain as to how the FIITJEE Group was carrying out the transactions from the Bank Account of the Appellant. The Appellant was also required to support the claims with full details and evidences. However, the Appellant kept on stating that the FIITJEE Group was having full control over the transactions through the Bank Account of the Appellant, but did not submit complete evidence against the FIITJEE Group.
8.15 It is observed that when confronted with the mismatch and discrepancies, it was claimed by the Appellant that they cannot explain any discrepancy or difference, "as transactions were routed by officials of FIITJEE Group. You are requested to ask the reason of the same from FIITJEE Group." The Appellant further stated in the Written Submissions dated 06.03.17 that:
"In support of our claim, that bank account was operated by FIITJEE group. We want to submit that, cheques for routing the transaction were filled and deposited by them and we did not have any control over there."
8.16 Again, in the Written Submissions dated 23.03.17, it was again submitted by the Appellant that "the claimed documents were not signed by us, reply this question, and would be best answered by FIITJEE only.
10ITA No.3980 & 3981/Del/2017 8.17 It is thus seen that many discrepancies and differences were pointed out to the Appellant and opportunities were given for it to explain the case, through various Order Sheet entries and opportunities in the appellate proceedings. However, the Appellant has not come out with clean hands even at this stage. Though it was repeatedly claimed by the Appellant that the FIITJEE Group was controlling the Bank Account and the Unexplained transactions, but the Appellant did not give complete evidence against M/s FIITJEE Ltd., and despite repeated opportunities did not specify the particular individuals of the FIITJEE Group who were involved in maxing the transactions through the Bank Accounts of the Appellant.
8.18 It is clear that the case of M/s FIITJEE Ltd. shall have to be examined to determine their exact role in the transactions through the Bank Account of the Appellant and to bring to Tax the Undisclosed Income therein. It is also seen that M/s FIITJEE Ltd. and individuals of this Group are the ultimate beneficiaries of the transactions through the Appellant Concern. Hence, such receipts in FY 09-10 (relevant to AY 10- 11), FY 10-11 (relevant to A.Y. 11-12) and in F.Y. 13-14 (relevant to A.Y. 14-15) will have to be brought to Tax.
8.19 In the instant case, the Appellant has been unable to justify any of the Grounds of appeal and hence these are rejected. The Appellant was unable to show that any relief was due and hence no relief can be granted to the Appellant."
3.8 Aggr ieved wit h th e fin din g of th e Ld. CIT(A), th e assessee is in appeal befor e th e Tr ibu n al r aisin g th e gr ou n ds ch allengin g t h e ju r isdict ion assu m ed for m ak in g assessm en t m ade u n der sect ion 153C of t h e Act as well as m er it of th e addit ion .
11ITA No.3980 & 3981/Del/2017 ITA No.3980/Del/2017 for AY: 2007-08
4. Fir st we t ak e of th e appeal for assessm en t year 2007-08. In gr ou n d No. 1, t he assessee h as r aised th e issu e t hat as per pr oviso to section 153C of t he Act , six year s h ave t o be r eck on ed fr om t he date of r ecor din g of sat isfact ion n ot e, i.e., 10/ 03/ 2014, wh ich falls in assessm ent year , 2014-15, and th u s accor din gly pr ecedin g assessm ent year s i.e. assessm en t year 2008-09 t o assessm ent year 2013-14, can on ly be assessed u n der section 153C of th e Act an d th e pr esent assessm en t year i.e. 2007-08 cann ot be assessed u n der sect ion 153C of t he Act an d, t h u s, m ak ing assessm en t u n der sect ion 153C of t h e Act by t h e Assessin g Officer , is void-ab- initio an d r equ ir es to be declar ed as nu llit y. 4.1 The Ld. cou n sel filed a paper book cont ain in g pages 1 to 170 and in su ppor t of t h e gr ou n d r aised, h e r efer r ed to t he ju dgm en t dated 17/ 08/ 2017 of t h e Hon gh Cou r t in t h e case of Sar war Agency Pr ivat e Lim ited (ITA No. 422/ 2017), available on page 62 t o 66 of t h e paper book .
4.2 The Ld. cou nsel su bm it t ed t h at section 153C(1) of t he Act h as been am en ded by way of Finan ce Act , 2017 w.e.f. 01/ 04/ 2017, for specifyin g th at th e assessm ent year s pr ecedin g t h e assessm en t year r elevant t o t h e pr eviou s year in wh ich sear ch is condu ct ed, ar e t o be assessed u nder pr ovision s of sect ion153C of t h e Act. The Ld. cou n sel su bm itt ed th at t h is am en dm en t has been h eld by t h e Hon ju dgm en t in t h e case of Sar war Agen cy Pr ivate Lim it ed (su pr a) as pr ospect ive in n atu r e and n ot applicable in th e year u n der con sider ation . 4.2.1 Accor ding t o t he Ld. cou nsel pr ior t o t he am en dm ent t o sect ion 153C(1) m en t ion ed above, th e six assessm en t year s t o be 12 ITA No.3980 & 3981/Del/2017 assessed u n der sect ion 153C of t he Act , ar e t h e 6 assessm en t year s pr ecedin g th e assessm en t year in wh ich th e sat isfact ion n ote for init iat in g pr oceedin g u n der sect ion 153C is r ecor ded or books of accou nt or ot h er docu m ent s belon gin g to t h e assessee have been h an ded over t o th e Assessin g Officer , as held by t h e H on Delh i High Cou r t in t h e case of Com m ission er of Incom e-t ax - 7 Vs. RRJ secu r ities Lt d(2016) 380 ITR 612 (Del). 4.3 On t h e ot h er han d, t he Ld. DR su bm itt ed t h at pr ovision s of th e Act h ave n ot been appr eciated pr oper ly in t h e case of RRJ Secu r it ies Lt d. (su pr a). Accor din g t o h er , t he Hon r elied on th e pr oviso below sect ion 153C(1) for con sider ing t he 6 assessm ent year s for m ak in g assessm en t u n der sect ion 153C of th e Act , wh er eas th e said pr oviso is wit h r efer en ce t o secon d pr oviso t o su bsect ion 153A(1) of th e Act i.e. for t he pu r pose of abetm en t of t h e assessm ent .
4.3.1 Accor ding t o h er , even pr ior to in tr odu ct ion of am en dm en t by way of Fin ance Act, 2017 t o sect ion 153C(1) of t h e Act , t he 6 assessm ent year s for assessm en t u nder sect ion 153C of t h e Act is to be tak en as r efer r ed t o in su b-sect ion 1 of sect ion 153A of t h e Act, i.e. t he 6 assessm en t years pr ecedin g t h e assessm ent year corr espon ding t o t he pr eviou s year in which , sear ch h as t ak en place. She su bm it ted t hat objective of th e sch em e of assessm ent s/ r eassessm en t u nder 153A or 153C of t h e Act is t o assess t he in com e of th e assessee in view of th e eviden ces fou n d du r ing t h e cou r se of sear ch act ion an d if per iod of 6 assessm en t year s for assessm en t / r eassessm en t is t ak en on t h e basis of dat e of sat isfaction n ote r ecor ded or dat e of docu m en t s, book s of accou n ts r eceived by t h e Assessin g Officer of th e oth er per son , t h en par t of 13 ITA No.3980 & 3981/Del/2017 a per iod for which docu m en ts ar e fou n d will get exclu ded an d a par t of t he per iod fr om t he dat e of t he sear ch action t o t h e dat e of th e docu m en t r eceived by th e Assessin g Officer of th e oth er per son , for wh ich n o evidences cou ld be available in sear ch, will get in clu ded. Accor ding t o her , th is in ter pr et at ion wou ld defeat t h e pu r pose for wh ich th e section 153A/ 153C have been in t r odu ced. 4.3.2 In view of th e su bm ission , sh e st ated th at n ot ice u n der sect ion 153C of t he Act h as been issu ed validly. 4.4 We have h ear d t h e r ival su bm ission s an d per u sed t h e r elevant m at er ial on r ecor d. Th e issu e in dispu t e in t h e in stan t case is t hat which 6 assessm en t year s ar e t o be assessed u n der sect ion 153C of t he Act .
4.4.1 As far as section 153A of t he Act is con cer n ed, th e 6 assessm ent year s, wh ich h ave t o be assessed or r eassessed, ar e th e 6 assessm en t years, pr eceding t h e assessm en t year r elevant t o th e pr eviou s year in wh ich sear ch is condu ct ed or r equ isit ion is m ade, as specified in clau se (b) of su bsection (1) of section 153A of th e Act , which is r epr odu ced as u n der :
"Assessment in case of search or requisition. 153A. (1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall--
(a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years 9[and for the relevant assessment year or years] referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;14
ITA No.3980 & 3981/Del/2017
(b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made 9[and for the relevant assessment year or years] :
Provided that the Assessing Officer shall assess or reassess the total income in respect of each assessment year falling within such six assessment years 9[and for the relevant assessment year or years] :
Provided further that assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years 9[and for the relevant assessment year or years] referred to in this sub-section pending on the date of initiation of the search under section 132 or making of requisition under section 132A, as the case may be, shall abate:"
(emphasis supplied extenrnally) 4.4.2 Pr ior t o th e am endm en t by way of Fin ance Act , 2017, t he 6 assessm ent years to be assessed/ r eassessed u n der t he sect ion 153C of t he Act ar e t o be t ak en as r efer r ed in su bsect ion (1) of t h e sect ion 153A of t he Act. For r eady r efer ence, t he sect ion 153C is r epr odu ced as u n der :
"Assessment of income of any other person. 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 [for six assessment years immediately preceding the assessment year relevant to the 15 ITA No.3980 & 3981/Del/2017 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 :
Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person :
(Bold portion inserted by way of Finance Act, 2017) 4.4.3 The pr oviso, below t he sect ion 153C of th e Act is in r elat ion to secon d pr oviso below t h e su bsect ion (1) of sect ion 153A of t h e Act. Th e said second pr oviso below sect ion 153A of th e Act is for deciding which assessm en t or r eassessm en t shall abat e. In t h e case of 153A of t h e Act , th e assessm ent s, if pendin g on t he dat e of th e in t im at ion of t h e sear ch u n der sect ion 132 of t h e Act , gets abated. Bu t in t h e case of 153C pr oceedin gs, th e Assessin g Officer h aving ju r isdict ion over th e oth er per son, get t he in for m ation for assessing/ r eassessing t h e case only aft er r ecor din g satisfaction by th e Assessing Officer of t h e sear ch per son an d h an din g over of t he r elevant docu m en ts, book s of accou n t s et c. t o t h e Assessing Officer h aving ju r isdict ion over su ch ot her per son , an d t her efor e, th e assessm en ts wh ich ar e pen din g on th e dat e of th e r elevan t docu m en t s r eceived by t he Assessin g Officer get abet. B efor e u s, th e Ld. DR h as su bm it t ed t h at th is pr oviso of sect ion 153C is n ot for decidin g th e six assessm en t year s for assessm en t or r eassessm en t for th e pu r pose of sect ion 153C of t h e Act . 4.4.4 H owever , we n ote th at , t h e legislat u r e h as in ser t ed an am endm en t t o sect ion 153C of t h e Act, specifyin g t he six assessm ent year s to be assessed, by way of Fin an ce Act, 2017 16 ITA No.3980 & 3981/Del/2017 w.e.f. 01/ 04/ 2017. Th is am endm en t h as been h eld by t h e Hon Delh i High Cou r t in th e case of Sar war Agen cy Pr ivate Lim it ed (su pr a) as pr ospect ive. Th e r elevan t par t of t he decision of t h e Hon d as u nder :
"11. Mr. Ashok Manchanda, Ld. Senior Standing counsel for the Appellant, sought to pursue this Court to reconsider its view in RRJ Securities (supra). The court declines to do so for more than one reason. First, for reasons best known to it, the Revenue has not challenged the decision of this Court in RRJ Securities (supra) in the Supreme Court. The said decision has been consistently followed by the authorities under this Court as well as by this Court.
Thirdly, the recent amendment to Section 153C(1) of the Act states for the first time that for both the searched person and the other person the period of reassessment would be six AYs preceding the year of search. The said amendment is prospective."
4.4.5 In r espect of t h e per iod pr ior to t he above am en dm en t , t h e Hon Secu r ities Lt d.(su pr a), after n oticing t h e decision in SSP aviat ion Lt d. Vs. DCIT (2012) 346 ITR 177, h as h eld as u n der :
"21. As discussed hereinbefore, once the AO of the searched person is satisfied that the seized assets/documents belong to another person and the said assets/documents have been transferred to the AO of such other person, the proceedings for assessment/reassessment of income of the other person has to proceed in accordance with provisions of Section 153A of the Act. Section 153A requires that where a search has been initiated under Section 132 of the Act, the AO is required to issue notice requiring the noticee to furnish returns of income in respect of six assessment years relevant to the six previous years preceding the previous year in which the search is conducted. As discussed hereinbefore, by virtue of second proviso to Section 153A, the assessment/reassessment pending on 17 ITA No.3980 & 3981/Del/2017 the date of initiation of search abate. In the context of proceedings under Section 153C of the Act, the reference to the date of initiation of the search in the second proviso to Section 153A has to be construed as the date on which the AO receives the documents or assets from the AO of the searched person. Thus, by virtue of second proviso to Section 153A of the Act as it applies to proceedings under Section 153C of the Act, the assessment/reassessment pending on the date on which the assets/documents are received by the AO would abate. In respect of such assessments which have abated, the AO would have the jurisdiction to proceed and make an assessment. However, in respect of concluded assessments, the AO would assume jurisdiction to reassess provided that the assets/documents received by the AO represent or indicate any undisclosed income or possibility of any income that may have remained undisclosed in the relevant assessment years....................................
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."
4.4.6 Th e decision of RRJ Secu r it ies Ltd. h as been followed by t h e Hon gh Cou r t in t h e case of Sar war Agen cy Pr ivate Lim it ed(su pr a). Thu s followin g t h e decision of t he Hon High Cou r t in th e case of RRJ Secu r it ies Lt d (su pr a), t h e six assessm ent year s in t h e case of t he assessee, for wh ich 18 ITA No.3980 & 3981/Del/2017 assessm ent / r eassessm en t cou ld be m ade u n der sect ion 153C of th e Act ar e t o be calcu lat ed to t h e dat e of han din g over of asset s or docu m en t s to t h e Assessin g Officer of t h e assessee. 4.4.7 In t h e inst an t case, th e sat isfaction u n der sect ion 153C of th e Act h as been r ecor ded by t h e Assessin g Officer of th e sear ch ed per son on 25/ 03/ 2014. A copy of th e r elevan t satisfaction n ote h as been placed by t h e assessee on pages 15 an d 16 of t h e paper book . The Assessin g Officer of t h e assessee h as r eceived t he docu m en t s su bsequ ent t o r ecor din g of dissatisfaction an d th u s, even we can t ak e t h is dat e of r ecor din g satisfact ion u n der sect ion 153C of th e Act as th e dat e wh en th e Assessing Officer of t he assessee r eceived t h e docu m en t s fr om t he Assessing Officer of t he sear ch per son. Sin ce t his dat e i.e. 25/ 3/ 2014 falls in assessm en t year 2014-15, t h e six assessm en t year s pr ecedin g t h e assessm en t year 2014-15, ar e assessm ent year 2008-09 t o assessm en t year 2013-14. Since th e assessm ent year in volved befor e u s is 2007-08, it is beyon d th e six assessm en t year s wh ich cou ld be assessed/ r eassessed u n der sect ion 153C of t he Act. Thu s, in ou r opinion th e assessm en t pr oceedin g u n der sect ion 153C of t he Act in assessm en t year in qu est ion, is wit hou t ju r isdiction and beyon d th e pu r view of t h e said pr ovision . Accor din gly, we qu ash t he assessm ent pr oceedin g u n der sect ion 153C of t he Act in t he instan t assessm ent year . Th e gr ou n d n o. 1 of t h e appeal is accor din gly allowed.
5. Sin ce we h ave alr eady qu ash ed t h e assessm ent pr oceedin g, we ar e n ot adju dicat in g t h e ot h er issu es r aised by t he assessee in its grou nds.
19ITA No.3980 & 3981/Del/2017
6. In t he r esu lt, t h e appeal for assessm ent year 2007-08 is allowed.
ITA No.3981/Del/2017 for AY: 2011-127. Now, we tak e of appeal for assessm en t year 2011-12. Th e gr ou n d No. 1 to 3 r elat es t o pr oceedin gs u n der section 153C ch allenged on ju r isdiction al gr ou n ds. In r ou nd No. 1, t h e assessee h as r aised th e issu e th at t he docu m en t s seized fr om t h e sear ch oper at ion on an oth er per son do not give r ise t o an y u ndisclosed incom e an d non e of t h e addit ion h as been m ade based on th ese docu m en t s. In gr ou n d No. 2, t h e assessee h as r aised t h at t h e sat isfaction u n der sect ion 153C r ecor ded on 25/ 03/ 2014 does n ot m eet t h e cr it er ia stipu lated u n der sect ion 153C of t h e Act.
8. Addr essin g t h e gr ou n ds, t h e Ld. cou n sel su bm it ted th at docu m en t s fou n d in th e cou r se of t h e sear ch oper at ion on t h e pr em ises of th e FIITJ EE Gr ou p , h ave been alleged to be as belon ging t o t h e assessee. He su bm it t ed t hat all t h ese docu m en t s ar e available in pu blic dom ain an d cam e in possession of t he FIITJ EE Gr ou p du r in g n or m al bu siness t r ansaction s wit h t h e assessee, an d t h u s th ese docu m en t s cann ot be said t o be belon ging t o t h e assessee. H e su bm it ted t h at on e of t he pr im e con dit ion for in vok ing sect ion 153C of t h e Act in t h e case of t he oth er per son is t h at t he docu m en t s or ot h er asset s fou n d du r in g th e cou r se of t he sear ch action , shou ld belon g t o su ch oth er per son . If docu m ent s ar e m er ely r elat ed t o t h e assessee, no act ion u n der section 153C of t he Act cou ld be in it iated in t h e case of t he assessee.
20ITA No.3980 & 3981/Del/2017 8.1 The Ld. cou n sel fu r th er su bm itt ed t h at t h e Assessing Officer of t h e sear ched per son h as n ot given a specific findin g as h ow t h e r elevant m at er ial belon ged to t he assessee an d in absence of su ch a fin din g, t h e assessm en t is vit iated. Accor ding to him , t he con dit ion of r ecor din g sat isfaction is an alogou s t o r ecor din g r easons u nder section 148 of t he Act an d t h er efor e t h e Assessin g Officer was r equ ir ed t o give r eason s as h ow th e said m at er ial belon ged t o t he assessee. In su ppor t of his con t en tion , h e r elied on th e decision of th e Hon 18/ 04/ 2018 in t he case of Pr in cipal Com m ission er of In com e Tax Delh i-18 vs. M / s NS soft war e in ITA No. 791/ 2017. 8.1.1 Th e Ld. cou n sel, fu r t h er ar gu ed t hat for a m om en t, even if it is pr esu m ed th at t h e docu m en t s belon g t o t h e assessee, bu t t h e sam e ar e n ot in t h e n atu r e of in cr im in at in g docu m ent s an d ar e docu m en t s m ain tain ed in r egu lar cou r se of t he bu sin ess tr an sact ions. Th e Ld. cou n sel su bm it t ed th at all t he docu m en t s m ent ion ed in t h e sat isfact ion not e h ave been r eplied t o be adequ at ely r ecor ded/ explain ed/ accou n t ing book s of accou n ts an d n o u n disclosed in com e is em anat in g ou t of t he sam e and n o addit ion h as been m ade on t h e basis of said docu m ent s in t h e assessm ent or der . The Ld. cou n sel r efer r ed t o t h e docu m en t s fou n d an d t heir explan at ion r epr odu ced by t h e Ld. CIT(A) in t h e im pu gn ed or der . In su ppor t of th e con ten t ion t h at for a valid ju r isdict ion u n der sect ion 153C of t he Act, th e docu m en t or m at er ial belon ged t o t h e ot h er per son shou ld be in cr im in at ing an d m u st r elat e t o t h e assessm en t year s, wh ose assessm ent ar e sou gh t to be r eopen ed, t he Ld. cou n sel r elied on t h e decision dat ed 04/ 09/ 2017 of t h e Hon In dex 21 ITA No.3980 & 3981/Del/2017 Secu r it ies Lt d. ( ITA 566/ 2017), wher ein t he Hon h as r elied on t h e decision of t h e Hon in t h e case of Com m ission er of Incom e Tax-III, Pu n e Vs. Sin gh ad Tech nical Edu cat ion Society (2017) 84 t axm an n .com 290 (SC). 8.1.2 Th e Ld. cou n sel fu r t her r elied on t h e decision of t h e Tr ibu n al dated 11/ 08/ 2017 in t h e case of Saldi Ch it s Pr ivate Lim it ed in ITA No.6697 to 6697/ Del/ 2013 an d su bm itt ed th at ch equ e book fou n d belongin g t o t h e per son s ar e n ot incr im inat in g in n at u r e.
8.2 On t he oth er h and, t h e Ld. DR r efer r ed t o t he list of docu m en t r epr odu ced by th e Assessin g Officer in th e assessm en t or der an d r efer r ed t o t h e stat em en t of Aseem Ku m ar Gu pt a, con tr oller of t h e assessee society/ tr u st , r ecor ded on 24/ 12/ 2012, in r espon se t o su m m ons issu ed u n der sect ion 131 of t he Act , wh ich is available on page 95 t o 105 of t h e appeal set. Accor din g t o th e Ld. D R copy of ban k accoun t open in g for m whet h er it is or igin al or phot ocopy, it always belongs to t h e assessee as it is n eit h er a docu m en t wh ich is r equ ir ed t o be given t o oth er per son in or din ar y cou r se of bu sin ess tr an sact ion n or it is a pu blic docu m en t . Th e ld. D R r efer r ed t o t he st at em en t of Sh . Aseem Gu pt a, wh er ein h e adm itt ed t h at Sh . Rajesh Shar m a (CA) an d Sh. DK Goel, Chair m an and M D of FIITJ EE Ltd. want ed t o u se n am e of t he assessee for rot at ing th e cer t ain fu n ds an d for which Mr . Gu pt a agr eed in lieu of pr om ise of pr oviding cer t ain st at u t or y au dit of som e of t h e con cer ns. Mr . Aseem Gu pt a fu r t h er st at ed th at accou nt open in g for m of Canar a bank was also sen t t o h im for sign atu r e an d th en blan k chequ e-book was also given for sign atu r e, which h e gave t hem back after sign at u r e.
22ITA No.3980 & 3981/Del/2017 8.2.1 In view of th e above stat em en ts, t he Ld. DR su bm itt ed th at n ot on ly the docu m ent s belong to the assessee bu t in corr obor at ion wit h th e stat em en t of Sh . Aseem Gu pt a, sam e ar e incr im inat in g in n at u r e. She su bm itt ed t h at th e ben efit u nder sect ion 11 an d 12 of t h e Act h as been den ied t o t h e assessee in view of th e conclu sion based on t h ese docu m en t s, an d t h u s t h e con tent ion of t h e Ld. cou n sel t hat n o addit ion h as been m ade on th e basis of t h e seized docu m en t is m isleadin g an d n ot cor r ect . In su ppor t of h er con t en tion sh e r elied on th e followin g ju dicial pr on ou n cem en t :
1. Decision of Hon'ble Delhi High Court in the case of Principal Commissioner of Income Tax Vs. Super Malls Private Limited (ITA No. 449 of 2016)
2. Decision of Hon'ble Gujarat High Court in the case of Kamleshbhai Dharamshibhai Patel Vs CIT (2013) 31 taxmann.com 50 (Gujrat).
3. Decision of Hon'ble Delhi High Court in the case of SSP Aviation Ltd. Vs DCIT 20 taxmann.com 214.
8.2.2 She distin gu ished th e decision of th e H on igh Cou r t in t h e case of NS Softwar e (su pr a) st at ing t hat in said case sat isfaction was r ecor ded in ver y casu al m ann er wit hou t givin g det ail of con t en ts of t h e seized docu m en t , wh er eas in t h e pr esen t case, docu m en t s h ave been pr oper ly specified as belon ging t o t h e assessee. She su bm itt ed t h at t h e docu m en t s in qu est ion ar e incr im inat in g qu a t h e assessm en t year u n der con sider ation an d th er efor e t h e r equ ir em en t pr ovided in t h e case of Sin gh ad Tech nical Edu cat ion Society (su pr a) ar e also fu lfilled.23
ITA No.3980 & 3981/Del/2017 8.3 We have h ear d t h e r ival su bm ission s an d per u sed t h e r elevant m ater ial on r ecor d in clu din g t h e cases r elied u pon by bot h th e par t ies. In t he in st ant case, wheth er t h e satisfact ion r ecor ded u n der sect ion 153C of th e Act m eets t he cr it er ia of ju r isdict ion al r equ ir em ent , following t h r ee issu es ar ise in befor e u s:
(i) Wh et h er th e docu m ent s on t h e basis of wh ich sat isfact ion u n der sect ion 153C h as been r ecor ded, belon gs t o th e assessee?
(ii) Wh et h er th e docu m ent s on t h e basis of wh ich sat isfact ion u n der section 150C h as been r ecor ded ar e in cr im in at ing in nat u r e in r espect of t he assessm en t year in volved.
(iii) Wh et h er th er e is a r equ ir em en t u n der section 153C of t h e Act t o r ecor d as h ow t he docu m ent s belon g to t he assessee.
8.3.1 Regar din g t h e r equ ir em en t t hat docu m en ts sh ou ld belon g to t h e per son , oth er t h an t h e per son sear ched, t he sect ion 153C of th e Act , in existence du r in g t h e r elevant per iod is r epr odu ced as u n der :
"153C 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 asset 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 such other person notice and assess or reassess 24 ITA No.3980 & 3981/Del/2017 income of such other person in accordance with the provisions of section 153A.
8.3.2 Th u s, it is one of t he pr er equ isit e for r ecor ding sat isfact ion u n der section 153C of t h e Act t h at t he m oney, bu llion et c. or t he book s of accou n t s or docu m en ts seized belon gs to t h ir d par t y, oth er th an th e sear ch ed per son .
8.3.3 Th e m ean in g and scope of t he t er m belon g explain ed by t h e H on India Holdin g Pr ivat e Lim it ed Vs ACIT (2015), 371 ITR 295 as u n der :
"14. In view of this phrase, it is necessary that before the provisions of Section 153C of the said Act can be invoked, the Assessing Officer of the searched person must be satisfied that the seized material (which includes documents) does not belong to the person referred to in Section 153A (i.e., the searched person). In the Satisfaction Note, which is the subject matter of these writ petitions, there is nothing therein to indicate that the seized documents do not belong to the Jaipuria Group. This is even apart from the fact that, as we have noted above, there is no disclaimer on the part of the Jaipuria Group insofar as these documents are concerned.
15. Secondly, we may also observe that the finding of photocopies in the possession of a searched person does not necessarily mean and imply that they "belong" to the person who holds the originals. Possession of documents and possession of photocopies of documents are two separate things. While the Jaipuria Group may be the owner of the photocopies of the documents it is quite possible that the originals may be owned by some other person. Unless it is established that the documents in question, whether they be photocopies or originals, do not belong to the searched person, the question of invoking Section 153C of the said Act does not arise.25
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16. Thirdly, we would also like to make it clear 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 purchasers 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."
8.3.4 In t he in st an t case, befor e we exam in e wh et h er t h e docu m en t s fou n d an d seized fr om t h e pr em ises of M / s. FIIT J EE and r ecor ded in sat isfaction n ot e u nder section 153C of t h e Act belon gs t o t h e assessee, it is r elevan t to r epr odu ce th e details of said docu m en ts an d t h e explan at ion of th e assessee in r espect of th ose docu m ent s. Th e Ld. CIT(A) in t h e im pu gn ed or der h as r epr odu ced t h e su bm ission of t h e assessee, which we ar e ext r act in g r elevan t par t as u n der :
Sl. Documents Explanation of the
No. assessee
1. Copy of let ter dat ed 13 Docu m en ts belon g t o t h e
/ 09/ 2010 by t h e assessee t o Can ar a ban k , Hau z
t h e Can ar a bank , Hau z Kh as Khau s an d on ly r elat ed
for issu e of t h e ch equ e-book t o/ r efer s t o t h e assessee
2. Copy of m inu t es of gener al Docu m en ts belon gs t o
body m eetin g of t h e assessee t he Canar a ban k , Hau z
h eld on 10/ 09/ 2010 Khau s an d on ly r elat ed
r egar din g m ain t ain in g an d t o/ r efer s t o t h e assessee
oper ation of bank accou n t
26
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3. List of pr esen t m em ber s of Docu m en ts belon gs t o the societ y and t h e t he Canar a ban k , Hau z sign at u r es. Khau s an d on ly r elat ed t o/ r efer s t o t h e assessee
4. Copy of PAN Car d of t h e It is pu blic docu m en t an d assessee can be fou n d fr om t h e place of any per son with wh om r ecor ded t r an sact ion as tak en place, th u s n ot belon g t o t he assessee an d later r efer s r elat ed t o t h e assessee.
4. Copy of r u le and r egu lat ion Th ese ar e pu blic of t he assessee societ y docu m ent s an d can be available wit h an y per son of pu blic at lar ge.
5. Copy of m emor an du m of Th ese ar e pu blic Associat ion of th e assessee docu m ent s an d can be societ y available wit h an y per son of pu blic at lar ge.
6. Copy of r esolu tion t o t h e Th ese ar e pu blic effect t hat accou n t sh all be docu m ent s an d can be open ed wit h Canar a ban k available wit h an y per son Hau z Khas of pu blic at lar ge.
7. Copy of cer tificat e of Th ese ar e pu blic r egist r at ion wit h r egist er of docu m ent s an d can be societ ies available wit h an y per son of pu blic at lar ge.
9. Copy of accou n t open in g Docu m en ts belon gs t o for m su bm itt ed t o Canar a t he Canar a ban k , Hau z ban k , H au z Khas Khau s an d on ly r elat ed t o/ r efer s t o t h e assessee
10. Copy of dr aft M oUs of t h e Un sign ed dr aft let t er , assessee with FIITJ EE LTD. n ot belon gin g t o t h e assessee.
11. Copies of dr aft lett er s Un sign ed dr aft let t er , addr essed t o FIITJEE Lt d n ot belon gin g t o t h e r egar din g th e sch em e of assessee scholar sh ip to be given t o t h em .
27ITA No.3980 & 3981/Del/2017 8.3.5 Fr om t he copy of let t er of r equ est for issu in g ch equ e book or copy of accou n t open in g for m su bm itt ed to t he Canar a ban k H au z Kh as, t h e only possibility t h at t h ese docu m ent s cou ld belon g eit h er t o t he assessee or to Can ar a ban k . If or iginal lett er addr essed t o t he ban k , is du ly su bm it t ed to t h e bank , t hen it belon gs t o t h e ban k , h owever , t h e said or igin al let t er t ill it is n ot su bm it ted t o t h e ban k , it belon gs t o t h e assessee. If a copy of t he or igin al lett er on wh ich ack n owledgem ent is r eceived fr om t h e bank , th en it wou ld belon g to t he assessee, as it wou ld be t h e copy m ar k ed for th e assessee. In t his case, Sh. Aseem Gu pta, con t r oller of t h e assessee societ y has adm itt ed t h at how t h e above docu m en t s t r avelled t o th e pr em ises of t h e FIITJ EE Ltd . He was su m m on ed u nder sect ion 131 of the Act an d h is st at em ent was r ecor ded on 24/ 12/ 2012 in con tin u at ion wit h t h e pr ocess of sear ch pr oceedin gs at t h e pr em ises of FIITJEE Lt d an d su r vey pr oceedin g at t h e pr em ises of th e assessee. In r esponse t o qu estion s r aised r egar din g open ing of bank accou n t s of t he assessee societ y in Canar a ban k ( i.e. qu estion n o. 9 ), h e st at ed th at h is fr ien d Sh. Rajesh Gu pta CA int r odu ced h im to Sh. DK Goel, Ch air m an of FIITJ EE Ltd. an d t hey want ed t o u se t h e assessee societ y for r otat in g t h e fu n ds and in t h at r egar d t h e ban k accou nt open in g for m s an d ot h er docu m en ts of t h e assessee societ y lan ded at t h e pr em ises of t he FIITJ EE Ltd . Th e r elevan t qu estion s m ade t o Sh . Aseem Gu pta an d h is r eplies ar e r epr odu ced as u n der :
"Q.8. Please state about the activities of these trust/society since their formation till today.28
ITA No.3980 & 3981/Del/2017 Ans. There are no activities in these trusts since their formation till today.
Q 9. I am showing you the photocopies of the account opening form of M/s. CMV Education Society & M/s. Sad Bhawan Trust used for opening of bank account in Canara Bank, Hauz Khas, Delhi. Please state, do you have opened this account? If yes, also explain the nature of transaction in these accounts?
Ans:- In regards to opening of bank account of M/s. Sadbhawana and M/s. CMV in Canara Bank, Hauz Khas, Delhi, I would like to state that my friend Sh. Rajesh Gupta, CA, introduced me to Sh. D.K. Goel, Chairman & M.D. of M/s. Fiitjee Ltd. and Sh. Rajesh Sharma, Executive Director (Finance), M/s. Fiitjee Ltd. They wanted to use the name of my entities M/s. EMV and M/s. Sadbhawana Trust for rotating their certain funds. I agreed to their offer as they promised me to give Statutory Audit of some of their concern. Later on, Sh. Rajesh Sharma send me account opening form of Canara Bank, Hauz Khas, New Delhi to my office for signature. After my signature the opened bank account of M/s CMV and M/s. Sadbhawna in the said bank. He send me the blank cheque books for my signature which was signed by me. How the cheques were used or what amount was mentioned on them, I was never informed. M/s. Fiitzee Ltd. was having complete control over these accounts thereafter Sh. Rajesh Sharma prepared the P & L account and Balance Sheet in his office for the F.Y. 20010-11 for M/s. CMV and M/s. Sadbhawna and send the same to me alongwith bank statements in August, 2011. Thereafter, I prepared books of account and got accounts of these trust and society audited from my friend Sh. Ravi Gupta, CA. Till the date of receipt of P&L account and balance sheet, I was not aware about the nature of the transaction made in the bank account of these trust/society. As incentive, I was allotted statutory audit of their following account:
1. M/s. Tetrahedron Education Academy Society, 5-9-14D, Sahara Manji, Saifabad, Hyderabad -500004
2. M/s. Srikara Educational Society, H. No. 8-3-167/D/15, 1st Floor, Kalyan Nagar, Hyderabad -500038.29
ITA No.3980 & 3981/Del/2017
3. M/s. Emanuel Education Society, H. No. 47-7-47, IV Lane, Dwarkanagar, Opp.- Nehru Bazar, Vishakhapatnam.
4. M/s. Vijetha Educational Society, H. No. 232, Shanti Plaza, KPHB Colony, Kulkatpally, Hyderabad. I have received Rs.60,000/- as audit fee for these concerns.
Q. 10. Was there any agreement between you as trustee and member of M/s. Sadbhawna and M/s. CMV Education Society respectively and M/s. Fiitjee Ltd. or its promoter members made?
Ans.: An agreement was signed by me as trustee/member of M/s Sadbhawna and M/s. CMV Education Society with M/s Fiitjee Ltd. This was prepared by M/s. Fiitjee Ltd. and was sent to me by Sh. Rajesh Sharma for my signature. It was regarding providing scholarship to needy students. The purpose of the said agreement was not apprehended by me at that time because I was not aware how transactions were rotated through my trust/society.
Q.11 Please state, do you have received any amount for any purpose or was likely to receive for any purpose in these trusts/societies from M/s Fiitjee Ltd. during the F.Y. 2009-10 or its promoter members, namely, Lata Goel, K K Goel, D.K. Goel, Monika Goel & Kanti Goel?
Ans. I have not received any money for any purpose and was also likely to not receive/receivable during the F.Y. 2009-10 from M/s. Fiitjee Ltd. or its promoters the name of which mentioned in question..
Q.12 Pl. state whether the said trust/society have given or have to give any amount for any purpose to M/s. Fiitjee Ltd. during the F.Y. 2009-10?
Ans.: There were not any transactions made or accrued with M/s. Fiitjee Ltd. by the said trust, namely, M/s. Sadbhawna and M/s. CMV Education society when the agreement was made between trust/society and M/s Fiitjee Ltd.? I have signed the agreement at the time of signing the account opening form but what date they have put on it, I am not aware.
30ITA No.3980 & 3981/Del/2017 Q. 13 Pl. state whether you have made any agreement or likely to mad any agreement for receiving back donations which you have given M/s. Fiitjee Ltd. from the said trust/society.
Ans:- I have not made any such agreement for receiving back donation from M/s Fiitjee Ltd. on behalf of these trust/society. For any reason either violation of any contents of agreement or else nor I am likely to made such agreement in future."
8.3.6 We not e t h at t h e stat em en t of Sh r i Aseem Gu pta, h as n ot been r et r acted an d as far as t h e facts of th e case available on r ecor d, t h e assessee h as n ot ch allen ged t r u t h of th e st atem ent s of Sh. Aseem Gu pt a.
8.3.7 It is evident fr om th e above st atem en t , h ow t h e copies of bank accou nt open in g for m an d ot her docu m en ts of t h e assessee societ y t r avelled t o th e pr em ises of th e FIITJ EE Ltd, an d t h u s t h er e is no dou bt as t h ese docu m en t s belon g to t h e assessee. The assessee cont en ded t hat t h ese docu m en t s belon gs t o t h e Canar a bank , however , t h e assessee h as n ot disch ar ged h is on u s to pr ove th e said con t en t ion . Th ese docu m en ts ar e also n ot wit h t h e Accor din gly, we r eject t he con t en tion of t h e assessee r aised in t h is r egar d an d hold th at t h e docu m en t s m en t ioned in t h e sat isfact ion n ote u n der sect ion 153C of t h e Act r ecor ded by t he Assessin g Officer of t h e sear ched t h e per son belon g to t h e assessee. 8.4 The second issu e, wh ich h as been r aised by th e Ld. cou nsel of th e assessee t hat t hese docu m en t s ar e n ot in cr im in atin g in n at u r e.
31ITA No.3980 & 3981/Del/2017 8.4.1 We have obser ved t he st at em en t of Sr i Aseem Gu pta, a par t of which h as been alr eady r epr odu ced above. It is eviden t fr om t he st atem en t t h at t h ese docu m en t s ar e par t of t h e fu n d r otat in g exer cise fr om t he assessee to M / s FIITJ EE Lt d. Th e Con tr oller of th e society h im self has adm it ted in r espon se t o qu estion No. 8 th at th er e was n o act ivities in t h e tr u st . H e h as also adm it ted t he fact th at du ly sign ed ch equ e book s of th e said Can ar a ban k accou n t was given by h im t o th e au th or ities of t h e FIITJ EE Lt d. Th e au t h or it ies of th e FIITJ EE Lt d. wer e h avin g com plet e con t r ol over th e fu n ds available in t h e said ban k accou n t. Sh. Aseem k u m ar Gu pt a adm it t ed of h avin g ign or ance of wh at k in d of act ivit ies wer e carr ied u sin g t h e n am e of th e assessee. Sh Aseem Gu pt a h as adm it t ed t hat for pr ovidin g th e nam e of th e assessee for r otat in g th e fu nds of M / s FIITJEE, he was given wor k of st atu t or y au dit of few con cer ns of FIITJ EE gr ou p.
8.4.2 Th u s, wh en we see t h ese docu m ent s m ent ion ed in t h e sat isfaction not e in cor r obor ation wit h t h e st atem ent of Sr i Assem Gu pt a, we do not have an y h esit at ion in accept in g t h at th ese ar e th e docu m en t s of in cr im in at ing n atu r e r aisin g th e dou bt s on t h e claim of t he ch ar it able act ivit y of t h e assessee societ y. Sin ce t h e bank accou nt s of th e Can ar a bank h as been oper ated an d u t ilized by t h e FIITJ EE Grou p du r in g th e year u nder con sider ation also and th u s t h ese docu m en ts in clu din g ban k accou n t open in g for m and oth er docu m en ts lik e m em or an du m of u n der st an din g et c per t ain t o t h e year u n der con sider at ion . Th e copy of lett er dat ed 13/ 09/ 2010 by t h e assessee t o t h e Canar a ban k for issu in g ch equ e book an d Copy of m inu t es of gener al body m eet in g h eld on 10/ 09/ 2010 cer tain ly per t ain to t he year u nder consider at ion i.e. 32 ITA No.3980 & 3981/Del/2017 pr eviou s year 2010-11 cor r espon din g to t h e assessm en t year 2011-12.
8.4.3 In view of t h e above, we hold t hat t h e docu m en t s m ent ion ed in t h e sat isfact ion n ot e ar e in cr im in atin g qu a t he assessm en t year in consider ation befor e u s.
8.5 The t h ir d issu e r aised by th e Ld. Cou n sel th at t h e Assessin g Officer is r equ ir ed t o r ecor d t h e sat isfaction n ot e u nder sect ion 153C of t h e Act as h ow th e docu m en t s m en tion ed th er ein belon g to t h e ot her per son .
8.5.1 We h ave hear d t he ar gu m en ts of t he Ld. Cou n sel on t h is issu e. Accor ding t o t h e Ld. cou nsel, in th e sat isfaction not e u nder sect ion 153C of t he Act , th e Assessing Officer of t h e sear ch ed per son shou ld r ecor d how t he docu m en t s n ot belon g t o t he sear ched per son an d sam e belong t o t h e ot her per son. Th e Ld. cou nsel in su ppor t of t he above pr oposition has r elied on t h e decision of t h e Hon i High Cou r t in t he case of NS Soft war e (su pr a). In t h e case of NS Soft war e (su pr a) t he satisfact ion n ot e r ecor ded h as been r epr odu ced by th e Hon 20 of t he decision , which is extr acted as u nder :
"23.07.2010 A search and operation was conducted on Raj Darbar Group of cases on 31.07.2008. During the court of search and operation at the premises of:
(i) Party A-20, Residence Cum office of Narendera Kumar Aggarwal, 1st & 2nd Floor, 7, Western Avenue, Maharani Bagh, New Delhi.
Various papers were found and seized belonging to M/s N.S. Software pvt. Ltd. the annexure are marked as under:
Party A-20 Annexure A-26, Hard Disk containing Books of Accounts of M/s. N.S. Software Pvt. Ltd.33
ITA No.3980 & 3981/Del/2017 Thus the Proceedings u/s 253C r.w.s. 153A of the Income Tax Act, 1961 are being initiated in the above case."
8.5.2 In r espect of t h e above sat isfact ion n ote in t h e case of NS Soft war e (su pr a), t he Tr ibu nal obser ved t h at t he Assessing Officer did not in dicat e h ow vagu ely r efer r ed docu m en t s in the sat isfaction n ote wer e fou nd t o be belon gin g to t h e assessee with in th e m ean ing of sect ion 153C of th e Act . Th e Tr ibu n al fu r th er observed t h at t h er e was n o r ecor din g/ r efer en ce abou t t he cont en t s of t h ese docu m en ts allegedly per t ain in g to t he assessee an d even in t h e assessm en t or der , n o su ch m ent ion h ad been m ade. 8.5.3 The Hon Tr ibu n al and obser ved t h at t he Ld. Assessin g Officer has n ot explain ed st eps t ak en by h im t o deter m ine t h at t he seized m at er ial belon g t o t h e assessee fir m . The H on th at t h e satisfact ion n ot e has been pr epar ed in t he st an dar d m ech anical for m at and it does n ot pr ovide an y details abou t t h e book s of accou nt s wh ich allegedly belong t o t he assessee fir m . In view of t he above obser vat ion , t he Hon th at t h e failu r e of th e Assessin g Officer t o r ecor d a specific sat isfaction an d h ow t he r ecover ed m at er ial belon g to t h e assessee in t he n ote t hat pr eceded t h e n ot ice issu ed u n der it ,, vit iat es t h e assessm ent .
8.5.4 In th e inst an t case, t he sat isfact ion not e r ecor ded by t he Ld. Assessin g Officer of t h e sear ched per son , is available on page 15 an d 16 of t h e paper book . Th e r elevan t ext r act of t he sam e is r epr odu ced as u n der :34
ITA No.3980 & 3981/Del/2017 "During the course of search and seizure operation u/s 132 conducted on 17.12.2012 on M/s. FIITJEE Limited and its promoter Shri Dinesh Kumar Goel.
From premises no FIITJEE Ftouse,29A, Kalu Sarai, Sarvpriya Vihar, New Delhi-16 documents marked as Annexure A-1 to A-8 A-01 & A-02 were found and seized & from premises no. FIITJEE Limited 7/2. Vashistht House Begumpur, Kalu Sarai, Delhi documents marked as Annexure A-1 to A-35 were found and seized.
It is seen that the above seized material contains following documents belonging to M/s. CMV Educational Society -
1 Annexure A-4, of party F02:-"
Pages no 19 to 24, contain pagers of bank account of CMV Education Society.
Page no 27 contains copy of PAN No AAAAC1679A of CMV Educational Society Page no 36-39 contains Moa of CMV Educational Society Page No. 40 Contains Certify True Extracts From the Board Meeting Of CMV Educational Society Held on 23.06.2010.
Page NO 41 To 44 papers related to CMV Educational Society Page no 45 contain ledger account of CMV Educational Society in the books of FIITJEE 01.09.2010 to 02.10.10.
2 Annexure A-20, Party F02 pages 42 to 48 contain draft MOU between society and FIITJEE Limited.
In view of the above, I am satisfied that documents seized belongs to a person other than the person searched under section 132 of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), 1961.
Hence, the proceeding u/s. 153C of the IT Act, 1961 is initiated in the case of M/s CMV Education Society."
35ITA No.3980 & 3981/Del/2017 8.5.6 It is eviden t t h at in t he above sat isfact ion n ote r elevan t t o th e in stan t case t h e Assessing Officer of th e sear ched per son has r ecor ded det ail of each docu m en t an d wh at t h e said docu m en t con tain s. Th e n atu r e of th e docu m ent is also clear in t he sat isfaction n ote r ecor ded. Wh er eas in t h e case of NS soft war e (su pr a) , th e Assessin g Officer has m er ely m en t ioned t h at var iou s paper s belon ging t o t h e said assessee wer e fou nd an d seized. Th e Assessin g Officer in said case on ly m en tion ed an nexu r e n u m ber and con t en ts of wh ich wer e not m en tion ed.
8.5.7 In view of t he above, in ou r opin ion , t h e fact s of t h e case of NS Soft war e (su pr a) ar e distin gu ish able an d t h u s, t he r at io of t h e said decision of t h e Hon over t h e fact s of t he in st ant case. Accor dingly, we r eject t h e con tent ion of t h e Ld. cou n sel on th is issu e. 8.5.8 In view of th e afor esaid discu ssions, we ar e of t h e opin ion th at th e pr oceedin gs u n der sect ion 153C of t he Act have been validly in it iat ed in th e case of t he assessee. Th e gr ou n ds No. 1 t o 3 of th e appeal ch allengin g t he validit y of t he pr oceedin gs u nder sect ion 153C of t he Act ar e accor din gly dism issed.
9. In gr ou n d No.4, th e assessee h as ch allenged t h e addit ion den ying t he st an d t ak en by t he Ld. CIT(A) t h at t h e assessee is n ot in effective r eceipt of any am ou nt from FIITJ EE Grou p . 9.1 The Ld. cou nsel su bm it t ed t hat sou r ce of t h e m on ey in t h e h an ds of t h e assessee is fr om the pr om ot er s of th e Gr ou p an d t h u s addit ion if an y shou ld be m ade in t he h ands of th e pr om ot er s of th at gr ou p r ath er t h an in t h e han ds of t h e assessee.
36ITA No.3980 & 3981/Del/2017 9.2 The Ld. D R, on t he oth er han d, r elied on t h e or der of t h e lower au t hor it ies and su bm it t ed t h at t h e don at ion s r eceived by t h e assessee h ave n ot been applied for t he object of t h e ch ar it able pu r pose of t h e assessee societ y an d sam e h ave been u sed for fu r th er ance of t h e bu sin ess of t he FIITJ EE gr ou p an d t h er efor e t he act ion of t h e Assessing Officer in den yin g t h e application of t h e fu n ds in t er m s of section 11 and 12 of t h e Act, is ju st ified. 9.3 We h ave hear d t h e r ival su bm ission an d per u sed t h e r elevan t m at er ial on r ecor d. Th e Assessing Officer h as exam ined t h e claim of applicat ion of in com e by th e assessee as u n der :
"5. The assessee has obtained registration u/s 12A of the I.T. Act, 1961. However, for this the assessee has to conform to the conditions prescribed there for. The Assessing Officer is required to examine the claim of exemption/s 11 and 12 of the Act for any contravention of the relevant provisions. The assessee is required to satisfy that about the genuineness of the activities promised or claimed to be carried out in each financial year to claim the exemption. Nowhere in its replies has the assessee Society shown evidence that the said company carried out any charitable activities during the year under consideration. Hence the assessee Society is held to have contravened the provisions relating to application of income by charitable societies and therefore the benefit of sec. 11 and 12 is denied to the assessee. The amount paid to FIITJEE Ltd is treated as its income being not utilized for the charitable purposes. Accordingly, the Society is assessed as an AOP and taxed as provided u/s provisions of sec 167B of the IT Act 1961.
6. As per Income & Expenditure statement filed along with Original Return of Income, contribution received have been shown at Rs. 23,59,65,731/-. Donations paid have been shown at Rs. 23,59,65,731/-. No other expenses have been debited on account of Charitable activities?"37
ITA No.3980 & 3981/Del/2017 9.4 Befor e u s, t h e Ld. cou n sel h as failed t o explain as h ow t h e fu n ds h ave been u t ilized for ch ar it able pu r pose. In t he in st an t case by way of collu sion between t h e FIITJ EE Grou p and t h e assessee, t h e fu n ds h ave been given th e r ou p en t it ies in t he n am e of disbu r sem en t of sch olar sh ip et c. Th is collu sion is eviden t fr om t h e stat em en t of Sh. Aseem Gu pt a as how t h e ch equ e book s of th e assessee societ y wer e cont r olled by th e au t h or it ies of th e FIITJ EE gr ou p. By way of pr ovidin g sch olarship t o t h e m er it or iou s stu den ts, th e FIITJ EE gr ou p h as served its bu sin ess pu r poses of att r act in g th e st u dent s t o var iou s cou r ses r u n by th em . Th u s in ou r opin ion , t h e fu n ds of th e assessee societ y have n ot been u t ilised for t he ch ar itable pu r poses. We, accor din gly, u ph old t h e fin ding of t h e lower au t h or it ies in denyin g t h e exem ption u nder sect ion 11 and 12 of t h e Act . The gr ou nd No. 4 of th e appeal is accor din gly dism issed.
10. In gr ou nd No. 5, the assessee h as ch allen ged the ju r isdict ional r equ ir em en t of pr esen ce of in cr im in at in g m ater ial. The gr ou n d of ju r isdict ional r equ ir em en t of pr esen ce of incr im inat in g m at er ial h as alr eady been adju dicat ed by u s in gr ou n ds No. 1 to 3 of t h e appeal and, th er efor e, we ar e n ot separ at ely adju dicat in g th e gr ou n d No. 5 of t he appeal an d it is dism issed accor din gly.
11. In gr ou nd No. 6, t he assessee h as r aised t he gen er al issu e th at t h e CIT(A) has m ade m an ifest er r or of law an d facts in su stain in g t h e addition , wh ich is n ot in accor dan ce wit h law. No 38 ITA No.3980 & 3981/Del/2017 specific argu m en ts in r espect of t h is grou n d h as been r aised befor e u s, accor din gly th is gr ou n d is dism issed as infr u ct u ou s.
12. In t he r esu lt , t h e appeal of t h e assessee for assessm en t year 2011-12 is dism issed.
13. To su m u p, t h e appeal of t h e assessee for assessm en t year 2007-08 is allowed, wh er eas appeal of t he assessee for assessm en t year 2011-12 is dism issed.
The decision is pronounced in the open court on 29th June, 2018.
Sd/- Sd/-
(AMIT SHUKLA) (O.P. KANT)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dat ed: 29 th Ju n e, 2018.
RK/ -(D.T.D.)
Copy forwarded t o:
1. Appellan t
2. Respon den t
3. CIT
4. CIT(A)
5. DR
Asst . Regist rar, ITAT, New Delh i