DEPUTY COMMISSIONER OF INCOME TAX, JHANDEWALAN V. ENSO INFRASTRUCTURE PVT. LTD, DELHI

ITA 4488/DEL/2024

AI Insights

The case revolves around an appeal by the Revenue against the order of the Ld. CIT(A)-24, New Delhi, which had allowed the appeal of Enso Infrastructure Pvt. Ltd., the respondent. The core issue was the interpretation of the block period for assessment under Section 153C of the Income Tax Act, 1961, following a search and seizure operation on the Ashish Begwani Group. The Revenue contended that the block period should be calculated from the date of search initiation, while the CIT(A) and the Tribunal held that it should be from the date of receipt of seized materials by the jurisdictional AO of the non-searched person, aligning with judicial precedents and the amended provisions effective from April 1, 2017.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 470376 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Other Referred Cases: CIT vs. M/s RRJ Securities Pvt. Ltd, CIT vs. Jasjit Singh
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: MAYANK PATAWARI
• Keywords: Search and seizure
• Section: 143(3); 132; 153A; 68; 153C

Judgement Text

"P a g e | 1 ITA No. 4488/Del/2024 Enso Infrastructure Pvt. Ltd. IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, DELHI [[[[ BEFORE SHRI M BALAGANESH, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No.4488/Del/2024 (A.Y: 2012-13) DCIT 344, ARA Centre, Jhandewalan Extension Delhi- 110055 Vs. Enso Infrastructure Pvt. Ltd., 9, LSC, Masjid Moth, Greater Kailash, Part-II Delhi – 110048 \u0001थायी लेखा सं./जीआइआर सं./PAN/GIR No.: AACCE0090R Appellant .. Respondent Appellant by : Sh. Surender Pal, CIT, DR Respondent by : Sh. Mayank Patawari, Adv. Date of Hearing 17.02.2025 Date of Pronouncement 27.02.2025 O R D E R PER MADHUMITA ROY, JM: This appeal filed by the Revenue is directed against the order passed by the Ld. CIT(A)-24, New Delhi arising out of the orders passed by the DCIT, Central Circle-6, New Delhi under Section 153C read with P a g e | 2 ITA No. 4488/Del/2024 Enso Infrastructure Pvt. Ltd. Section 143(3) of the Income Tax Act, 1961 (hereinafter referred as “Act”) for assessment year 2012-13 on the following grounds:- “1. Whether on the facts and circumstances of the case and in law, Ld. CIT(A) was justified in holding that block periods for assessment u/s 153C of the Income-tax Act, 1961, have to be calculated from the date of receipt of the books of accounts, documents or assets seized, by the jurisdictional AO of the non-searched person and not from the date of initiation of search by relying on First Proviso to Section 153C, even when this Proviso specifically deals only with the abatement of proceedings (as referred to second proviso of Section 153A) and does not deal with the calculation of block periods? 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in quashing the assessment order u/s 153C on the grounds that the amended provision w.e.f. 01.04.2017 are not relevant in this case when the satisfaction was recorded on 20.09.2018 and by the time the amendment to the Section 153C was already into effect (01.04.2017), which clarified that the relevant assessment years have to be calculated according to the date of search. 3. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that block periods for assessment u/s 153C of the Income-tax Act, 1961, have to be calculated from the date of receipt of the books of accounts, documents or assets seized, by the jurisdictional AO of the non-searched person, even when the position of law is clarified after the amendment introduced by Finance Act, 2017, that the block period of 6AYs and 10AYs as mentioned in Section 153C and Section 153A have same meaning and have to be calculated from the \"assessment year relevant to the previous year in which search is conducted? 4. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in ignoring that the implementation provisions have to be interpreted in consonance with the charging provision and there cannot be any anomalous situation created by the interpretation of the implementation provision. The provisions u/s 153A and 153C of the Act have to be construed in such a harmonious way that there will not be any different sets of 6 years for reopening of the assessments in case of the person searched and the other person? 5. The appellant craves leave to add, amend. P a g e | 3 ITA No. 4488/Del/2024 Enso Infrastructure Pvt. Ltd. 2. The brief facts leading to the case are that a search and seizure operation under Section 132 of the Act was carried out on Ashish Begwani Group on 22.10.2016. During the course of search various documents related to ‘accommodation entry’ were seized. From the assessment order, it was observed that the satisfaction in terms of Section 153C was recorded on 20.09.2018 by the AO of searched party and on 20.09.2018. However, the Assessing Officer observed “Further, consequent to search action under Section 132 in Ashish Begwani Group on 22.10.2016, as per provisions of Section 153C of the Act, satisfaction by the AO of the searched person (Ashish Begwani) was recorded on 20.09.2018 and seized material was handed over to the AO of M/s Enso Infrastructure Private Limited, the assessee. After perusing the information available on record and documents/ information received from the AO of searched person, satisfaction was recorded on 20.09.2018 on part of the AO of M/s Enso Infrastructure Private Limited (the assessee). Thereafter, notice under Section 153C of the Act, was issued on 24.09.2018 and was duly served. Thereafter, the AO made the addition of Rs. 24,02,47,598/- under Section 68 of the Act by assessing the income of the assessee at the same amount. Against the above action of the AO, assessee preferred the appeal before the Ld. CIT(A), who P a g e | 4 ITA No. 4488/Del/2024 Enso Infrastructure Pvt. Ltd. vide his impugned order dated 31.7.2024 has allowed the appeal of the assessee. Hence, the Revenue is in appeal before us. 3. Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal. 4. Per contra, Ld. AR for the assessee relied upon the order of the Ld. CIT(A) and submitted that he has passed a well reasoned order, which do not require any interference and needs to be upheld. 5. We have heard the rival submissions made by the respective parties We further perused the records, materials placed before. We note that Ld. First Appellate Authority has allowed the appeal by observing as under:- “I have considered the material on record including written submission of the AR of the appellant filed in course of appellate proceedings. I have also perused the assessment order u/s 153C r.w.s. 143(3) of the Act passed by the Assessing Officer In the present appeal the appellant has raised following grounds of appeal and additional ground of appeal. 4.1.1 In Additional Ground of appeal, the appellant has contended that the Assessing Officer has erred in law' in issuing notice u/s 153C of the Act for the year under consideration as it is beyond the block of six years, hence, making such issuance beyond jurisdiction. 4.1.2 The brief facts of the case are that search and seizure operation u/s1132 of the IT Act, was carried out on Ashish Begwani Group on 22.10.2016. During the course of search various documents related to ‘accommodation entry’ were seized. From the assessment order, it was observed that the satisfaction in terms of P a g e | 5 ITA No. 4488/Del/2024 Enso Infrastructure Pvt. Ltd. Section 153C was recorded on 20.09.2018 by theAssessing Officer of searched party and on 20.09.2018 by the Assessing Officer of appellant and notice u/s 153C was issued on 24.09.2018. However, the Assessing Officer observed “Further:, consequent to search action u/s 132 in Ashish Begwani Group on 22.10.2016, as per provisions of Section 153C of the Act, satisfaction by the AO of the searched person (Ashish Begwani) was recorded on 20.09.2018 and seized material was handed over to the AO of M/s Enso Infrastructures Private Limited, the assessee. After perusing the information available on record and documents/ Information received from the AO of searched person, satisfaction was recorded on 20.09.2018 on part of the AO of M/'s Enso Infrastructures Private Limited (theassessee). Thereafter, notice under Section 153C of the Act, was issued on 24.09.2018 and was duly served” 4.1.3 The Appellant submitted that the period of six assessment years as per the decision of Jurisdictional High Court of Delhi mean six years prior to the AY in which the satisfaction note u/s 153C was recorded by the concerned Assessing Officer. The-satisfaetion- note-in the instant case was recorded by the Assessing Officer on 20.09.2018 i.e. in the F.Y. 2018-19 relevant to AY 2019-20 therefore six years period as referred in Sec 153C(1) should have been from AY 2013-14 to 2018-19. The appellant has relied on the judgment of Hon’ble High Court of Delhi in the case ofCIT vs. M/s RRJ Securities Pvt. Ltd and judgment of Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh. 4.1.4 The submission of the appellant and the judicial position on the facts of the case have been carefully perused. The appellant submitted that the position of law has been very clearly laid down by Hon’ble High Court of Delhi in the case of C3T vs. RRJ Securities and Hon’ble Supreme Court in the case of CIT vs Jasjit Singh. In these cases, Hon’ble Courts has held that the six-year period as referred in Section 153C(1) shall be computed with reference to the date of recording of the satisfaction as date of search which is 20.09.2018 i.e., AY 2019-20. The relevant extract of the decision of the Hon’ble Supreme Court and the Jurisdictional High Court are reproduced below for ready reference: 1. In Jasjit Singh (supra), the Hon’ble Supreme Court held as under: “8. In SSP Aviation (supra) the High Court inter alia reasoned as follows:- \"14. Now there can be a situation when during the search conducted on one person under Section 132, some P a g e | 6 ITA No. 4488/Del/2024 Enso Infrastructure Pvt. Ltd. documents or valuable assets or books of account belonging to some other person, in whose case the search is not conducted, may be found. In such case, the Assessing Officer has to first be satisfied under Section 153C, which provides for the assessment of income of any other person, i. e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the Assessing Officer having jurisdiction over the other person. Thereafter, the Assessing Officer having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess or reassess the income of such other person in the, manner contemplated by the provisions of Section 153A. Now a question may arise as to the applicability of the second proviso to Section 153A in the case of the other person, in order to examine the question of pending proceedings which have to abate. In the case of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search under Section 132 or the requisition under Section 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date.\" 9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises are not searched and in respect of whom the specific provision under Section 153-C was enacted. The revenue argued that the proviso [to P a g e | 7 ITA No. 4488/Del/2024 Enso Infrastructure Pvt. Ltd. Section 153(c)(1)] is confined in its application to the question of abatement 10. This Court is of the opinion that the revenue's argument is insubstantial and without merit. It is quite plausible that without the kind of interpretation which SSP Aviation adopted, the A.O. seized of the materials - of the search party, under Section 132 - would take his own time to forward the papers and materials belonging to the third party, to the concerned A.O. In that event if the date would virtually \"relate back\" as is sought to be contended by the revenue, (to the date of the seizure), the prejudice caused to the third party, who would be drawn into proceedings as it were unwittingly (and in many cases have no concern with it at all), is dis-proportionate. For instance, if the papers are in fact assigned under Section 153-C after a period of four years, the third, party assessee's prejudice is writ large as it would have to virtually preserve the records for at latest 10 years which is not the requirement in law. Such disastrous and harsh consequences cannot be attributed to Parliament. On the other hand, a plain reading of Section 153-C supports the interpretation which this Court adopts. 11. For the foregoing reasons, the Court finds no merit in these appeals; they are accordingly dismissed, without order on costs. ” 2. In RRJ Securities (Supra), the Hon’ble Delhi High Court held as under: “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 P a g e | 8 ITA No. 4488/Del/2024 Enso Infrastructure Pvt. Ltd. assets/documents to the AO of the Assessee. In this case, it would be the date of the recording of satisfaction under Section 153C of the Act, i.e., 8th September, 2010. In this view, the assessments made in respect of assessment years 2003-04 and 2004-05 would be beyond the period of six assessment years as reckoned with reference to the date of recording of satisfaction by the AO of the searched person. It is contended by the Revenue that the relevant six assessment yearsyyrmdeLbe the assessment years prior to the assessment year relevant to the previous year in which the search was conducted. If this interpretation as canvassed by the Revenue is accepted, it would mean that whereas in case of a person searched, assessments in relation to six previous years preceding the year in which the search takes place can be reopened but in case of any other person, who is not searched but his assets are seized from the searched person, the period for which the assessments could be reopened would be much beyond the period of six years. This is so because the date of handing over of assets/documents of a person, other than the searched person, to the AO would be subsequent to the date of the search. This, in our view, woidd be contrary to the scheme of Section 153C(1) of the Act, which construes the date of receipt of assets and documents by the AO of the Assessee (other than one searched) as the date of the search on the Assessee. The rationale appears to be that whereas in the case of a searched person the AO of the searched person assumes possession of seized assets/documents on search of the Assessee; the seized assets/documents belonging to a person other than a searched person come into possession of the AO of that person only after the AO of the searched person is satisfied that the assets/documents do not belong to the searched person. Thus, the date on which the AO of the person other than the one searched assumes the possession of the seized assets would be the relevant date for applying theprovisions of Section 153A of the Act. We, therefore, accept the contention that in anyview of the matter, assessment for AY 2003-04 and AY 2004- 05 were outside the scope of Section 153C of the Act P a g e | 9 ITA No. 4488/Del/2024 Enso Infrastructure Pvt. Ltd. and the AO had no jurisdiction to make an assessment of the Assessee's income for that year. ” 4.1.5 In this case the search was carried out on 22.10.2016 which is prior to the amendment ofSection 153C( 1) which is w.e.f. 01.04.2017. Relying on the judgment of Hon’ble Delhi High Court in the case of RRJ Securities (Supra) and Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh, I hold that A.Y. 2012-13 is not covered within six block AYs in Section 153C of the Act and the Additional Ground of appeal is allowed. Accordingly, the addition made by the AO is deleted.” 6. After carefully perusing the aforesaid findings of the Ld. CIT(A), we note that it is an admitted fact that in the instant case satisfaction note was recorded by the Assessing Officer on 20.09.2018 i.e. in the F.Y. 2018-19 relevant to AY 2019-20 therefore six years period as referred in Sec 153C(1) should have been from AY 2013-14 to 2018-19. In the first appellate proceedings, the assessee has relied on the judgment of Hon’ble High Court of Delhi in the case of CIT vs. M/s RRJ Securities Pvt. Ltd and judgment of Hon’ble Supreme Court in the case of CIT vs. Jasjit Singh, wherein the Hon’ble Courts has held that the six-year period as referred in Section 153C(1) shall be computed with reference to the date of recording of the satisfaction as date of search which is 20.09.2018 i.e., AY 2019-20. The relevant extract of the decision of the Hon’ble Supreme Court as well as Hon’ble High Court have been reproduced as aforesaid. In this case the search was carried out on 22.10.2016 which is prior to P a g e | 10 ITA No. 4488/Del/2024 Enso Infrastructure Pvt. Ltd. the amendment of Section 153C( 1) which is w.e.f. 01.04.2017. Therefore, in our considered opinion the Ld. First Appellate Authority has correctly held that that A.Y. 2012-13 is not covered within six block AYs in Section 153C of the Act and accordingly, he rightly deleted the addition in dispute. Hence, we do not find any infirmity in the order of the Ld. CIT(A) and accordingly, uphold the same. Thus the grounds raised by the Revenue stand dismissed. 7. In the result, the appeal filed by the Revenue stand dismissed. Order pronounced in the open court on 27.02.2025 Sd/- (M. Balaganesh) Sd/- (Madhumita Roy ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 27.02.2025 PS: Rohit Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT P a g e | 11 ITA No. 4488/Del/2024 Enso Infrastructure Pvt. Ltd. ASSISTANT REGISTRAR ITAT NEW DELHI "