Income Tax Appellate Tribunal - Lucknow
M/S. Diamond Consultancy Services ... vs Deputy Commissioner Of Income Tax, ... on 28 September, 2021
I.T.A. Nos.629 to 631/Lkw/2018
1
Assessment Years:2009-10 to 11-12
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH 'A', LUCKNOW
(THROUGH VIRTUAL COURT)
BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND
SHRI T. S. KAPOOR, ACCOUNTANT MEMBER
ITA Nos.629 to 631/Lkw/2018
Assessment Years:2009-10 to 11-12
M/s Diamond Consultancy Vs. Dy.C.I.T.,
Services Pvt. Ltd., C.C.-II,
55-A, Gulam Jilani Khan Road, Kanpur.
Topsia, Kolkata.
PAN:AADCD0484F
(Appellant) (Respondent)
Appellant by Shri Ashish Jaiswal, Advocate
Respondent by Smt. Sheela Chopra, CIT, D.R.
Date of hearing 01/09/2021
Date of pronouncement 28/09/2021
ORDER
PER T. S. KAPOOR, A.M.
This is a group of three appeals filed by the assessee against separate orders of learned CIT(A) all dated 10/07/2018. The assessee has taken various grounds of appeal however, at the time of hearing only ground Nos. 1 to 4 were argued, which are identical and for the sake of completeness are reproduced below:
"1. That the notice issued and assessment completed u/s 153C of the act is invalid and unlawful without jurisdiction.
I.T.A. Nos.629 to 631/Lkw/2018 2 Assessment Years:2009-10 to 11-12
2. That the notice issued u/s 153C of the act is without the satisfaction as required under the provision of income tax act, 1961.
3. That the notice issued u/s 153C of the act is not based upon any incriminating material found during the search with the searched person u/s 153A.
4. That the initiation of assesssment proceeding u/s 153C of the act for the assessment completed u/s 143(3) of the act without any incriminating material is invalid and unlawful.
5. That the ld. CIT(A) has erred in confirming the addition u/s 68 of the it act, 1961 on account of unexplained share capital and share premium of rs.1,71,25,000/-.
6. That the appellant had duly discharged his onus cast upon him u/s 68 of the it act, 1961.
7. That the assessment completed by ld. AO is arbitrary, prejudice and unlawful.
8. That the ld. AO has erred in providing proper opportunity to the appellant."
2. There was an application, filed by the Department, with a request that the cases be heard through physical hearing only to which Learned counsel for the assessee objected and submitted that the cases are continuously beingh adjourned and there is high demand in these cases and interest component is increasing and moreover, it was submitted that there is only a single legal issue which is covered in favour of the assessee by the judgment of various courts and Tribunal and, therefore, there will not be any need for physical hearing of the cases as no documents are required to be referred and only from the copy of satisfaction note and Panchnama, it can be concluded that there was no material found during the search in the case of searched person which related to the assessee and therefore, initiation of proceedings u/s 153C were itself illegal. It was submitted that he can demonstrate this fact within a few minutes and I.T.A. Nos.629 to 631/Lkw/2018 3 Assessment Years:2009-10 to 11-12 therefore, in view of these facts it was prayed that the appeals can be heard virtually. Going through the case files, we observed that orders under these appeals were passed u/s 153C of the Act and therefore, it was important for us to find out as to whether any material relating to the assessee or belonging to the assessee was found during search of the searched person and finding that the issue was quite simple, we rejected the adjournment application of the Revenue and directed the assessee to proceed with his arguments.
3. Learned counsel for the assessee submitted that a search & seizure operation u/s 132 of the Act was conducted on 24/09/2010 in the case of Mehtab Alam C/o Sultan Villa, Jajmau, Kanpur and in the case of Nausheen Farah Lari, w/o Mehtab Alam at the Chowdhary Charan Singh Airport, Amousi, Lucknow when these two persons were about to board Jet Airways Flight from Lucknow to Kolkata and during search cash amounting to Rs. 2 Crores was seized which was found from the possession and besides cash five documents were also found from their possession which were also seized by the Department. Learned counsel for the assessee invited our attention to the copy of Panchnama, placed at pages 4 to 13 of the paper book. Inviting our attention to page 9 of the paper book, Learned counsel for the assessee submitted that inventory of cash found and seized is mentioned on this paper whereas the five documents seized during the search were placed at pages 18 to 22 of the paper book. Learned counsel for the assessee submitted that other than the cash and five documents, nothing was seized and in these five documents there is no mention of the name of the assessee. Further inviting our attention to the statement of Mehtab Alam, placed at pages 15 to 17 of the paper book. Learned counsel for the assessee submitted that in none of the questions or answers, Mr.Mehtab Alam has mentioned the name of the assessee and therefore, it was argued that no documents, what to call of incriminating relating to the assessee or belonging to the assessee, was found during search on Mehtab Alam. Therefore, the initiation of proceedings u/s 153C itself are illegal in nature as the basic requirement of section 153C is that some document or thing belonging to I.T.A. Nos.629 to 631/Lkw/2018 4 Assessment Years:2009-10 to 11-12 or relating to the assessee should have been found during the course of search on a searched person and in this respect our attention was invited to the provisions of section 153C of the Act. In this respect Learned counsel for the assessee submitted that Hon'ble Delhi High Court in the case of Pr. CIT vs. Allied Perfumer (P) Ltd. [2021] 432 ITR 237 (Del), vide order dated 14/12/2020, has decided similar issue in favour of the assessee and our attention was invited to the written submissions wherein the relevant findings of Hon'ble court have been reproduced. Learned counsel for the assessee further invited our attention to a judgment of Hon'ble Apex Court in the case of ACIT vs. Pepsi Foods (P) Ltd. SLP No.4659 of 2015 dated 4th December, 2017 against the High Court ruling wherein the Hon'ble High Court has held that before issue of notice u/s 153C, the Assessing Officer is required to arrive at a conclusive satisfaction that document or thing belonging to a person, other than the searched person, have been found. It was submitted that no document belonging or relating to the assessee was found therefore, this satisfaction could not have been arrived. Reliance was further placed on the judgment of Hon'ble Bombay High Court in the case of Arpit Land (P) Ltd. [2017] 393 ITR 276 (Bom) where Hon'ble Bombay High Court has held that where seized document forming basis of proceedings u/s 153C did not belong to assessee, said proceedings would be null and void. Learned counsel for the assessee further placed reliance on an order of Lucknow Bench of the Tribunal in the case of Vinay Pratap Singh in I.T.A. Nos. 682 to 687/Lkw/2015 wherein the Tribunal has held that the provisions of section 153C cannot be applied in the absence of handing over of documents by Assessing Officer of searched person to the Assessing Officer of the other person. In view of these judicial precedents and in view of the facts and circumstances of the cases, it was submitted that in the absence of any incriminating documents relating to or belonging to the assessee, the provisions of section 153C could not have been triggered and it was prayed that the assessment orders passed by the Assessing Officer u/s 153C be quashed.
I.T.A. Nos.629 to 631/Lkw/2018 5 Assessment Years:2009-10 to 11-12
4. Learned CIT, D.R., on the other hand, heavily relied on the orders of the authorities below and our particular attention was invited to the findings of learned CIT(A) where the learned CIT(A) has specifically dealt with these arguments of the assessee and our specific attention was invited to para 5.3 to 5.7 and it was argued that in view of these detailed findings of learned CIT(A), the grounds taken by the assessee are required to be dismissed.
5. We have heard the rival parties and have gone through the material placed on record. We find that it is undisputed fact that a search & seizure operation u/s 132 of the Act was conducted on 24/09/2010 in the case of Mehtab Alam and Smt. Nausheen Farah Lari wherein cash amounting to Rs. Two crore was seized. The copy of Panchnama, placed at pages 4-13 of the paper book, suggests that along with cash, loose papers, as per Annexure-LP1, consisting of five pages, were also seized. The documents marked as LP1 contains five letters, a copy of which is placed at pages 18 to 22 of the paper book. These five documents are on the letter head of five different firms and none of the above letters contain the name of the assessee either directly or indirectly. On examination of the statement of Mehtab Alam, placed at pages 15 to 17 of the paper book, we find that in none of the questions or answers, the name of the assessee has been mentioned. The order of the Assessing Officer also states that cash amounting to Rs. Two crore was seized and besides the cash five documents were also found which were also seized. Other than these two items of cash and five documents, nothing was seized. In the statement of Mehtab Alam and in the documents seized during search, there is no mention of the name of the assessee. The satisfaction note, placed at pages 1 to 3 of the paper book, also does not contain any documents which were seized during the search other than cash of Rs. Two crore and five documents. Similar satisfaction notes have been prepared for all the three years. However, for the sake of completeness, the satisfaction note for the assessment year 2009-10 has been made part of this order, which is reproduced below:
I.T.A. Nos.629 to 631/Lkw/2018 6 Assessment Years:2009-10 to 11-12 5.1 The satisfaction note, coupled with the Panchnama, suggests that other than cash and five documents, nothing was seized during search.
The assessee challenged the initiation of proceedings u/s 153C before the learned CIT(A), who rejected these grounds by holding as under:
"5.1 Ground no. 1, 2 and 3 relates to the legal challenge of the appellant for issue of notice u/s 153C of the I.T. Act. The contention of the appellant is that there exists no I.T.A. Nos.629 to 631/Lkw/2018 7 Assessment Years:2009-10 to 11-12 satisfaction by the AO to assume jurisdiction u/s 153C of the Act. It was also contended that in absence of any incriminating material for the relevant assessment year in appeal, notice issued u/s. 153C of the Act by the AO is without jurisdiction and hence void-ab-initio and illegal. Therefore, the assessment framed u/s. 153C/144 is wholly illegal.
5.2 Undersigned has carefully gone through the assessment order, written submission and the verbal argument of the Ld. A.R. of the appellant. Through its grounds of appeal and written submission, the appellant has challenged the assessment, on the following legal grounds:
i) Notice issued u/s 153C of the Act dated 21.02.2014 did not have necessary jurisdiction, hence, entire assessment is without jurisdiction.
ii) There exist no satisfaction relating to the assessment year in appeal.
iii) Another legal challenge of the appellant is that notice u/s.
153C is without jurisdiction because no incriminating document relating to these relevant assessment year was found.
5.3 Case of the appellant was centralized vide order u/s 127 of the Act dated 24.11.2011 of Ld. CIT-XVIII, Kolkata from ITO-52(3), Kolkata to ACIT, CC-I, Kanpur. Against the order u/s 127 dated 24.11.2011 of Ld. CIT-XVIII, Kolkata, assessee had filed a writ petition before Hon'ble High Court of Kolkata. Vide order dated 01.10.2012, Hon'ble High Court had set-aside and quashed the order. It was further ordered by the Hon'ble High Court of Kolkata that the order would not however, prevent the authorities concerned from passing a fresh order u/s 127 of the Act, in accordance with law after giving the petitioners a reasonable opportunity of hearing. Since, Hon'ble High Court had set-aside the order u/s 127 of the Act, the jurisdiction over the assessee had restored back to ITO-52(3), Kolkata. In compliance to the order of Hon'ble High Court of Kolkata, Ld. CIT- XVIII, Kolkata has passed another order u/s 127 dated 18.02.2013. Ld. CIT- XVIII, Kolkata has again transferred the case from ITO-52(3), Kolkata to ACIT, CC-I, Kanpur. The case has I.T.A. Nos.629 to 631/Lkw/2018 8 Assessment Years:2009-10 to 11-12 been centralized with this office as per order u/s 127 of the IT. Act, 1961 circulated vide letter F. No. 19/CIT(C)/KNP/58- ll-12-59/MBMA/2Q12-13/5091 dated 25.02.2013 issued by the Commissioner of Income Tax (Central) Kanpur. Therefore, notice u/s 153C dated 21.02.2014 read with section 153A of the IT. Act, 1961 was issued by the Assessing Officer. From the above facts of the case, it is apparent that the Assessing Officer issued notice u/s 153C of the Act on 21.02.2014 after the jurisdiction was vested with him by virtue of order u/s 127 of the Act dated 25.02.2013 passed by Commissioner of Income Tax (Central) Kanpur, Therefore, notice issued by the Assessing Officer is perfectly valid and justified in the eyes of law.
5.4 Another legal change of the appellant is that only ten days time is allowed to file the return of income u/s 153C of the Act and therefore, the entire assessment is bad in law cannot be accepted because Assessing Officer is well within its rights to allow maximum of 30 days, as per the provisions of law for filing the return of income u/s 153C/153A of the Act. He is also entitled to reduce the time limit of 30 days looking into the facts and circumstances of the case. Appellant has failed to adduce any evidence to demonstrate how Assessing Officer has erred in reducing the time limit for filing the return. Hence, this legal ground of the appellant is rejected.
5.5 Also, undersigned has carefully gone through the assessment order, written submissions, remand report and rejoinder filed by the appellant as well as verbal arguments of the Ld. A.R. It is seen that a search and seizure action u/s 132 of the Act was conducted on Shri Mehtab Alain and his wife Smt. Nausheen Farah, on 24.09.2010, at Chowdhary Charan Singh Airport, Amousi, Lucknow. During the search, unaccounted cash of Rs. 2,00,00,000/- and certain documents were found and seized by the investigation wing of the department. It was also observed that Shri Mehtab Alam, who is one of the key person of the appellant company was carrying this unaccounted cash to Kolkata. It was also found that appellant companies are incorporated in Kolkata and family members of Shri Mehtab Alam are the directors and key persons of the appellant company. Also, I.T.A. Nos.629 to 631/Lkw/2018 9 Assessment Years:2009-10 to 11-12 another interesting and noteworthy fact is that appellant company has advanced huge loans and advance to companies and entities where-in, Shri AAehtab Alam and his family members are key persons. The detailed scanning of the entities, advancing huge share capital/premium to the appellant company reveal that, such entities are paper entities and do not engage in any business activities. It is categorically noted by the Assessing Officer in para-7, page- 2 of the assessment order that Shri Mehtab Alam groyp,._p£_aises were involved in money laundering through Kolkata base entities, like the appellant company M/s, Diamond Consultancy Services Pvt. Ltd., M/s. Hooghy Consultancy Services Pvt. Ltd. and M/s. Ganga Jamuna Commotrade Pvt. Ltd.. Further, the satisfaction recorded by the Assessing Officer is extracted and reproduced here-in- under:
"SATISFACTIONNOTE FOR ISSUE U/S153C READ WITH SECTION 1S3A OF THE I. T. ACT, 1961 M/s. Diamond Consultance Services Pvt. Ltd. 55-4, Gautam Jilani, Khan Road, Topsia, Kolkata-39 A.Y.-10-11 A Search & Seizure operation u/s 132 of the I.T. Act was conducted on 24.09.2010 in the case of Shri Mehtab Alarm, C/o M/s Sultan Villa, Jaajmau, Kanpur and Smt Nausheen Farah Lari W/o Shri Mehtab Atatn, C/o Sultan Villa, Jajmau, Kanpur at the Chowdhary Charan Singh Airport, Amousi, Lucknow when these two persons were about to board Jet Airway Flight No. 9W24621 from Lucknow to Kolkata on 24.09.2010. Cash amounting to Rs. 2 Crores was seized which was found from their possession kept in two hand bugs. Besides above, 5 documents were also found from their possessions which were also seized by the, department.
On perusal of the Appraisal report, it was noticed that the Mehtab Alam Group Of cases were involved in money laundering business through Kolkata based companies namely M/s Ganga Jamuna Commotrade Pvt. Ltd., M/s Hooghly Consultancy Services Pvt. Ltd. & M/s Migrate Vyapar Pvt. Ltd. besides the above company.
It was further noticed that unsecured loans of Rs.51,01,527/- has been granted by the assessee company to M/s Model Echoes Pvt. Ltd, Rs. 2.07 crores to M/s Model Tanners (I), Pvt. Ltd. and Rs. 1.10 crores to M/s Model age Pet Products Pvt. Ltd. Smt. Shaheen Rabia & Smt Nishat Ara are the Directors in the company.
The case, was centralized from ITO-52(3), Kolkata to this office as per order u/s 127 of the I.T. Act, 1961 dated 24.11,2011 issued by the Commissioner of Income Tax- XVIII, Kolkata. Being aggrieved with the order of CIT(A), Kolkata, assessee filed a writ petition bearing W.P. No. 272 of 2012, before the High I.T.A. Nos.629 to 631/Lkw/2018 10 Assessment Years:2009-10 to 11-12 Court of judicature at Calcutta. Vide order dated 01.10.2012, Hon'ble High Court ordered as under-
"The provision of section 127 (2) have been complied with in part, but not in full. Order is apparently non-speaking and does not disclose any reason whatsoever.
The impugned order is set aside and quashed. This order will not however, prevent the authorities concerned front pausing a fresh order in accordance with law should the same be necessary."
Since, Hon'ble High Court has set aside the order n/s 127, the jurisdiction over the assesses was restored back to ITO-52(3), Kolkata. Accordingly, case records along with folder containing writ petition and relevant portion of the Appraisal Report were sent to ITO-52(3), Kolkata under proviso to the section 153 B of the I.T. Act, 1961.
Meanwhile, Ld. CIT-XVIII, Kolkata passed order u/s 127(2) dated 18.04.2013 transferring the case to ACIT, CC-I, Kanpur. In compliance to the centralization order, ITO-52, Kolkata transferred back the case records to this office on 01.05.2013. Later on, Ld. CIT(Central), Kanpur passed order u/s 127 transferring the case from ACIT, CC-I, Kanpur to this office.
Therefore, I am satisfied this is the fit case for issue of notice ii/'s 153C read with section 1S3A of the Act. Accordingly, notice u/s 153C read with 153A of the LT. Acl is issued to the assessee M/s Diamond Consultancy Services Pvt. Ltd., 55-A. Gulam Jilani, Khan Road. Topsia, Kolkata for assessment year 2009-10."
It is noticed that on the headline of the satisfaction note assessment year is clearly mentioned as A.Y. 2010-11 whereas in the concluding paragraph of the satisfaction note, A.O. has inadvertently mentioned A.Y. as 2009-10. This being the typographical error and looking into the non- challenge of this typographical error by the appellant during assessment/appeal proceedings and also considering the provision of section 292BB of the Act it is concluded that the satisfaction recorded by the A.O. belongs to A.Y, 2010-11. Thus, it is noted that Assessing Officer has recorded the proper satisfaction as envisaged u/s 153C of the Act.
5.6 Further, from the above discussion, it is apparent that appellant company is one of the dubious entities, involved in accepting share premium/capital without carrying on any business activities and advancing loan to entities where in family members of Shri Mehtab Alam, are key persons. Hence, it is concluded that there exist undisclosed asset in the form of seized cash of Rs. 2,00,00,000/- and I.T.A. Nos.629 to 631/Lkw/2018 11 Assessment Years:2009-10 to 11-12 incriminating material. Also, Assessing Officer has recorded proper satisfaction note which is reproduced here-in-above as envisaged u/s 153C of the Act. Hence, all the jurisdictional requirement u/s 153C of the Act is satisfied.
5.7 Reliance of the learned A.R. of the appellant on the decision of Hon'ble Supreme Court in the case of Sinhgad Education Society is misplaced because, in the cited case laws no undisclosed asset or incriminating document for the relevant assessment year was found, whereas in the present facts of the case, incriminating asset in the form of unexplained cash of Rs.2,00,00,000/- and other material were found and seized during search proceedings. Therefore, in the considered opinion of the undersigned, judgment of the Hon'ble Apex Court cited Supra is distinguishable and not applicable to the facts at hand, In fact, Assessing Officer has made the complete autopsy of the modus operendi of the appellant company and connection with the Shri Mehtab Alam to launder money to the entities, wherein he himself and his family members were key persons.
5.8 Therefore, considering the above detailed discussion on the factual matrix of the case, it is concluded that notice issued by Assessing Officer dated 21.02.2014 u/s 153C of the Act, is perfectly legal, as it fulfills all the requirements of law like possession of legal jurisdiction u/s 127 of the Act, recording of satisfaction by the Assessing Officer and existence of unexplained asset or incriminating material found and seized during the course of search action. Hence, action of the Assessing Officer with regard to issue of notice u/s 153C of the Act cannot be faulted with and therefore, legal grounds of appeal of the appellant are rejected and dismissed."
5.2 From the above findings of learned CIT(A), we do not find that learned CIT(A) has rightly appreciated the ground taken by the assessee that in the absence of any document relating to or belonging to the assessee, found during search on a searched person, the provision of 153C cannot be triggered. Learned CIT(A) has rejected this contention of the I.T.A. Nos.629 to 631/Lkw/2018 12 Assessment Years:2009-10 to 11-12 assessee by holding that the Assessing Officer in para 6 page 2 of the assessment order has held that Mehtab Alam group of cases were involved in money laundering through Kolkata based entities like the assessee company. However, his finding do not deal with the arguments of the assessee that since nothing relating to or belonging to the assessee was found during search of searched person, the provisions of section 153C were not legally initiated. To decide as to whether the provision of section 153C were rightly triggered or not, it is important to visit the provision of section 153C of the Act, which for the sake of completeness are reproduced below:
"SECTION 153C.
Assessment of income of any other person.
(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 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]:] I.T.A. Nos.629 to 631/Lkw/2018 13 Assessment Years:2009-10 to 11-12 [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:] [Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made [and for the relevant assessment year or years as referred to in sub-section (1) of section 153A] except in cases where any assessment or reassessment has abated.] [(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year--
(a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or
(b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or
(c) assessment or reassessment, if any, has been made, before 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, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.]"
I.T.A. Nos.629 to 631/Lkw/2018 14 Assessment Years:2009-10 to 11-12 5.3 The bare analysis of the above provisions of section 153C reveals that these provisions are triggered only when some money, bullion, jewellery or any books of account or documents, seized or requisitioned during search on a searched person, pertains to or there is any information contained therein, relating to a person other than the searched person is found, then the books of account or documents or assets, seized or requisitioned belonging to other person shall be handed over to the Assessing Officer having jurisdiction over such other person. In the present cases, no such document, belonging to or relating to the assessee, has been seized and therefore, no handing over of such documents to the Assessing Officer of other person has been done. The existence of any money, bullion, jewellery or other valuable article or thing or books of account relating to or belonging to the other person is a sine qua non for initiation of proceedings u/s 153C of the Act and without the existence of such material, the initiation of proceedings u/s 153C are liable to be quashed. This aspect has been examined by Hon'ble Delhi High Court in the case of Pr. CIT vs. Allied Perfumer (P) Ltd. [2021] 432 ITR 237 (Del), vide order dated 14/12/2020 wherein Hon'ble court has held as under:
"12. We have duly considered the contentions advance by Mr. Maratha, however, are unable to agree with him. The ITAT, after perusing the relevant records, including the orders passed by the Revenue Authorities, observed as follows:
10."...We find that the additions made by the AO are beyond the scope of section 153C of the Income-tax Act, 1961, because no incriminating material or evidence had been found during the course of search so as to doubt the transactions. It was noted that in the entire assessment order, the AO has not referred to any seized material or other material for the year under consideration having being found during the course of search in the case of assessee, leave alone I.T.A. Nos.629 to 631/Lkw/2018 15 Assessment Years:2009-10 to 11-12 the question of any incriminating material for the year under appeal. We also find that the case laws cited by the Ld CIT(DR) are not relevant to the present case.
Therefore, in our considered opinion, the action of the AO is based upon conjectures and surmises and hence, the additions made is not sustainable in the eyes of law, because this issue in dispute is now no more res-integra, in view of the decision dated 29-8- 2017 of the Hon'ble Supreme Court of India in the case of Commissioner of Income Tax- III, Pune v.
Sinhgad Technical Educational Society reported in (2017) 84 Taxmann.com 290 (SC) as well as the decisions of the Hon'ble Delhi High, Court passed in the case Commissioner of Income-tax v. Kabul Chawla reported (2016) 380 ITR , 573 (Del) and in the case of Principal Commissioner of Income-tax, (Central)-2 vs. Index Securities (P) Ltd.
11. Respectfully following the precedents as aforesaid, we quash the assessment made u/s.153(C)/143(3) of the I.T. Act, 1961 and decide the legal issue in favour of the Assessee and accordingly, allow the Cross Objection filed by the assessee.
12. Following the consistent view taken in the assessment year 2001-02 in the Assessee's Cross objection, as aforesaid, the another Cross objection filed by the Assessee relating to assessment years 2002-03 also stand allowed."
(Emphasis Supplied)
13. Upon reading of the aforesaid extracted portion of the impugned order, it is dearly discemable that the TTAT has given a finding of fact that the assessments make no reference to the seized material or any other material for the years under consideration, that was found during the course of search, in the case of the assessee. Mr. Maratha is also unable to point out any incriminating material related to the assessee which could justify the action of the Revenue. Merely because a satisfaction note has been recorded, cannot lead us to reach to this conclusion, especially when the Revenue has not laid any foundation to support their I.T.A. Nos.629 to 631/Lkw/2018 16 Assessment Years:2009-10 to 11-12 contention. In the factual background as explained above, the assumption of jurisdiction under section 153C cannot be sustained in view of the decision of this Court in the case of Kabul Chawla (supra).
14. In view of the foregoing, we find no question of law, much less substantial question of law, that calls for a consideration. Accordingly, the present are dismissed."
5.4 Similarly Hon'ble Supreme Court in the case of ACIT vs. Pepsi Foods (P) Ltd. SLP No.4659 of 2015 dated 4th December, 2017 has held as under:
"11. It is evident from the satisfaction note that apart from saying that the documents belonged to the petitioner and that the Assessing Officer is satisfied that it is a fit case for issuance of a notice under section 153C, there is nothing which would indicate as to how the presumptions which are to be normally raised as indicated above, have been rebutted by the Assessing Officer. Mere use or mention of the word 'satisfaction' or the word I am satisfied in the order or the note would not meet the requirement of the concept of the satisfaction as used in section 153C of the said Act The satisfaction note itself must display the reasons or basis for the conclusion that the Assessing Officer of the searched person is satisfied that the seized documents belong to a person other than the Searched person. Going through the contents of the satisfaction note, any 'satisfaction' of the kind required under section 153C of the said Act could not be discerned. [Para 11]
12. This bring the position the very first step prior to the issuance of a notice under section 153C has not been fulfilled. Inasmuch as this condition precedent has not been met, the notices under section 153C are liable to be quashed. [Para 12]"
5.5 The Hon'ble Bombay High Court in the case of CIT vs. Arpit Land Pvt. Ltd. & Anr. [2017] 393 ITR 0276 (Bom) has held as under:
I.T.A. Nos.629 to 631/Lkw/2018 17 Assessment Years:2009-10 to 11-12
"6. We note that in terms of Section 153C of the Act at the relevant time i.e. prior to 1st June, 2015 the proceedings under Section 153C of the Act could only be initiated/proceeded against a party - assessee if the document seized during the search and seizure proceedings of another person belonged to the party - assessee concerned. The impugned order records a finding of fact that the seized documents which formed the basis of initiation of proceedings against the respondent assessees do not belong to it. This finding of fact has not been shown to us to be incorrect. Further, the impugned order placed reliance upon a decision of Gujarat High Court in Vijaybhai Chandrani vs. ACIT 333 ITR Page 436 which records that the condition precedent for issuing notice under Section 153C of the Act is that the document found during search proceedings should belong to assessee to whom notice is issued under Section 153C of the Act. It was fairly pointed out to us by Mr. Mistry, the learned Senior Counsel for the respondent - assessee that the above decision was reversed by the Supreme Court in CIT vs. Vijaybhai N. Chandrani (2013) 357 ITR 713. However, we find that the Apex Court reversed the view of Gujarat High Court on the ground that efficacious alternative remedy was available to the petitioner to raise its objections before the authorities under the Act. Therefore, the Gujarat High Court should not have exercised its extra ordinary writ jurisdiction to entertain the petition. However, the Apex Court also clarified that it was not expressing any opinion of the correctness or otherwise of construction placed by the High Court on Section 153C of the Act. The Revenue has not pointed out any reason why the construction put on Section 153C of the Act by Gujarat High Court is not correct/appropriate. We find that in any case our Court has also taken a similar view in CIT vs. Sinhgad Technical Education Society (2015) 378 ITR 84 and refused to entertain Revenue's appeal.
7. The grievance of the Revenue as submitted by Mr. Kotangale is a submission made on the basis of suspicion and not on the basis of any evidence on record which would indicate that the respondent - assessee and persons searched were all part of the same group. Be that as it may, the requirement of Section 153C of the Act cannot be I.T.A. Nos.629 to 631/Lkw/2018 18 Assessment Years:2009-10 to 11-12 ignored at the alter of suspicion. The Revenue has to strictly comply with Section 153C of the Act. We are of the view that non satisfaction of the condition precedent viz. the seized document must belong to the respondent - assessee is a jurisdictional issue and non satisfaction thereof would make the entire proceedings taken thereunder null and void. The issue of Section 69C of the Act can only arise for consideration if the proceedings under Section 153C of the Act are upheld. Therefore, in the present facts, the issue of Section 69C of the Act is academic.
8. In view of the above reasons and particularly the finding of fact that seized document which forms the basis of the present proceedings, do not belong to the petitioner and the same not being shown to be perverse, the question as raised does not give rise to any substantial question of law and thus not entertained."
5.6 The Lucknow Bench of the Tribunal in the case of Vinay Pratap Singh in I.T.A. Nos. 682 to 687/Lkw/2015, vide order dated 22/02/2021 has held as under:
"8. The above findings of the Tribunal are though with respect to section 158BC of the Act, the provisions of section 158BC are in pari material with those of section 153A of the Act which implies that in respect of assessments u/s. 153A handing over of any documents to the Revenue authorities is a must and in the present case there was no document/statement requisitioned by Income Tax Department other than cash therefore, the question of handing over of document by Assessing Officer of searched person to Assessing Officer of other person does not arise and in the absence of handing over of documents the provisions of Section 153C cannot be applied."
6. In view of the judicial precedents, we allow ground nos. 1 to 4 in all the appeals and quash the assessment orders as having been passed without authority of law. Since we have quashed the assessment orders, consequent orders of learned CIT(A) are also quashed.
I.T.A. Nos.629 to 631/Lkw/2018 19 Assessment Years:2009-10 to 11-12
7. Rest of the grounds in all the appeals have become infructuous and hence dismissed.
8. In the result, all the appeals of the assessee stand allowed.
(Order pronounced in the open court on 28/09/2021) Sd/. Sd/.
( A. D. JAIN ) ( T. S. KAPOOR )
Vice President Accountant Member
Dated:28/09/2021
*Singh
Copy of the order forwarded to :
1. The Appellant
2. The Respondent.
3. Concerned CIT
4. The CIT(A)
5. D.R., I.T.A.T., Lucknow
BY ORDER
ASSISTANT REGISTRAR