Jagjit Singh, Punjab V. ACIT, New Delhi

ITA 1097/DEL/2015

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8975 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 24-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Search and seizure; Document seized; Deemed dividend; Documents seized; Set aside
• Section: 143(3); 153A; 131; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1095/DEL./2015 (ASSESSMENT YEAR : 2009-10) ITA NO.1096/DEL./2015 (ASSESSMENT YEAR : 2010-11) ITA NO.1097/DEL./2015 (ASSESSMENT YEAR : 2011-12) ITA NO.1098/DEL./2015 (ASSESSMENT YEAR : 2012-13) SHRI JAGJIT SINGH, VS. ACIT, CENTRAL CIRCLE 21, C/O M/S. SATISH AGGARWAL & ASSOCIATES NEW DELHI. 4/5B, ASAF ALI ROAD, 1 ST FLOOR, NEW DELHI 110 002. (PAN : AFTPS0204A) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SATISH AGGARWAL, ADVOCATE REVENUE BY : SHRI J.K. MISHRA, CIT DR SMT. NAINA SOIN KAPIL, SENIOR DR DATE OF HEARING : 04.09.2019 DATE OF ORDER : 01.10.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : SINCE COMMON QUESTIONS OF FACTS AND LAW HAVE BEEN R AISED IN THE AFORESAID APPEALS, THE SAME ARE BEING DISPOSED OFF BY WAY OF CONSOLIDATED ORDER TO AVOID REPETITION OF DISCUSSION. ITA NOS.1095 TO 1098/DEL./2015 2 2. APPELLANT, SHRI JAGJIT SINGH (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEALS SOUGHT TO SET ASIDE T HE IMPUGNED ORDERS DATED 23.12.2014 PASSED BY THE COMMISSIONER OF INCOME - T AX ( APPEALS ) - XXVI, NEW DELHI QUA THE ASSESSMENT YEARS 2009-10, 2010-11 , 2011-12 & 2012-13 RESPECTIVELY ON THE IDENTICAL GROUNDS EXCEPT THE DI FFERENCE IN AMOUNT OF ADDITION INTER ALIA THAT :- (1) THAT THE ORDER OF THE LEARNED CIT (A) IS ARBI TRARY BIASED, BAD IN LAW AND FACTS OF THE CASE IN SO FAR AS IT UPHOLDS THE A SSESSMENT ORDER PASSED BY THE ASSESSING OFFICER. (2) THAT THE LEARNED CIT (A) HAS GROSSLY ERRED IN S UMMARILY BRUSHING ASIDE THE CONTENTION AND THE SUBMISSION OF THE APPE LLANT WHILE UPHOLDING THE ASSESSMENT ORDER. (3) THAT THE LEARNED CIT (A) HAS GROSSLY ERRED IN C ONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER IN ASSUMING JURISDICT ION UNDER SECTION 153C READ WITH SECTION 153A OF THE ACT WHICH IS BAD IN LAW. (4) THAT THE LEARNED CIT (A) HAS GROSSLY ERRED IN NOT ANNULLING THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UN DER SECTION 153C WHICH IS BAD IN LAW AND VOID AB-INITIO. (5) THAT THE LEARNED CIT (A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION DEPOSITED IN CASH AS UNEXPLAINED CASH CREDIT IN BAN K ACCOUNTS. APART FROM THE AFORESAID GROUNDS, FOLLOWING GROUND NOS.(3) & (4) HAVE BEEN SEPARATELY RAISED IN AY 2012-13 :- (3) THAT THE LEARNED CIT (A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE LEARNED ASSESSING OFFICER IN ASSUMING JURISDICT ION UNDER SECTION 153C READ WITH SECTION 153A OF THE ACT WHICH IS BAD IN LAW. (4) THAT THE LEARNED CIT (A) HAS GROSSLY ERRED IN N OT ANNULLING THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UN DER SECTION 143 (3) WHICH IS BAD IN LAW AND VOID AB-INITIO. 3. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE ISSUES AT HAND RAISED IN ALL THE AFORESAID APPEALS ARE : ASSESSEE IS INTO THE BUSINESS OF BUILDERS AND DEVELOPERS. ON THE BASIS OF SEARCH OPERATION C ARRIED OUT AT THE BUSINESS ITA NOS.1095 TO 1098/DEL./2015 3 PREMISES OF M/S. ABW GROUP OF CASES AS WELL AS RESI DENTIAL PREMISES OF THEIR DIRECTORS, CERTAIN DOCUMENTS/ BOOKS OF ACCOUNT WERE SEIZED. ASSESSING OFFICER (AO) OF THE SEARCHED PERSON RECORDED SATISFACTION N OTE DATED 23.01.2014 ON THE BASIS OF DOCUMENTS SEIZED STATING THEREIN THAT CERT AIN DOCUMENTS BELONGING TO ASSESSEE COMPANY WERE SEIZED AND PROVISIONS CONTAIN ED UNDER SECTION 153C OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) ARE ATTRACTED. THEREAFTER, AO OF THE PERSON OTHER THAN SEARCHED PERSON EXAMINED THE DOCUMENTS SEIZED AND RECORDED A FRESH SATISFACTION NOTE DATED 23.01.2014 BY RECORDING SATISFACTION THAT SAID DOCUMENTS BELONGED TO ASSESSEE COMPANY AN D THEREBY ISSUED NOTICE DATED 23.01.2014 U/S 153C READ WITH SECTION 153A OF THE ACT FOR AYS 2006-07 TO 2011-12 AND NOTICE U/S 143 (3) FOR AY 2012-13 ON THE BASIS OF SATISFACTION NOTE DATED 20.01.2014 PREPARED BY AO OF M/S. ABW IN FRASTRUCTURE (P) LTD. I.E. SEARCHED PERSON, REQUIRING THE ASSESSEE TO FILE THE RETURN OF INCOME FOR THE AFORESAID ASSESSMENT YEARS WITHIN 15 DAYS. ASSESSE E FILED RETURNS. THEN NOTICE U/S 142 (1)/143 (2) ALONG WITH DETAILED QUESTIONNAI RE WAS ISSUED. FOR AYS 2009-10, 2010-11 & 2011-12, ASSESSMENT ORDER FRAMED U/S 153C READ WITH SECTION 153A AND IN AY 2012-13, ASSESSMENT ORDER U/ S 143 (3) HAS BEEN FRAMED. 4. FROM THE BANK STATEMENT, AO NOTICED THAT THERE H AS BEEN HEAVY CASH DEPOSIT IN THE ACCOUNT OF THE ASSESSEE. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE, AO MADE ADDITION OF RS.73,45,000/-, RS.51 ,50,000/-, RS.84,70,000/- ITA NOS.1095 TO 1098/DEL./2015 4 & RS.70,10,000/- FOR AYS 2009-10, 2010-11, 2011-12 & 2012-13 RESPECTIVELY ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. 5. ASSESSEE CARRIED THE MATTER BY WAY OF APPEALS BE FORE THE LD. CIT (A) WHO HAS CONFIRMED THE ADDITIONS BY DISMISSING THE A PPEALS. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEALS. 6. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN THE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER RAISED JURISDICTIONAL ISSUE INTER ALIA THAT AO HAS NO JURI SDICTION TO FRAME ASSESSMENT U/S 153C R/W SECTION 153A AND AS SUCH, THE ASSESSME NT RECORD IS BAD IN LAW AND VOID AB INITIO; THAT NO INCRIMINATING MATERIAL HAS BEEN UNEARTHED PERTAINING TO ASSESSEE HAVING REFLECTION ON THE INCOME OF THE ASS ESSEE AND RELIED UPON THE JUDGMENTS OF HONBLE DELHI HIGH COURT IN CIT VS. RRJ SECURITIES LTD. 380 ITR 61 (DELHI), ARN INFRASTRUCTURE INDIA LTD. VS. A CIT 394 ITR 569 (DELHI) & PCIT VS. SARWAR AGENCY (P) LTD. 397 ITR 400 (DELH I) . 8. HOWEVER, ON THE OTHER HAND, LD. DR FOR THE REVEN UE IN ORDER TO REPEL THE ARGUMENTS ADDRESSED BY THE LD. AR FOR THE ASSESSEE FILED WRITTEN SUBMISSIONS WHICH ARE EXTRACTED FOR READY PERUSAL AS UNDER :- ITA NOS.1095 TO 1098/DEL./2015 5 2. IN THIS CASE, SEARCH WAS CONDUCTED IN THE ABW I NFRASTRUCTURE LTD. AND SH. ATUL BANSAL, DIRECTOR OF THE SAID COMP ANY AND OTHER RELATED GROUP CONCERNS ON 09.11.2011. THE SMS TRANSCRIPTION S WERE SEIZED AS PER ANNEXURE-7. ON PAGE 2 AND 3 OF THE ASSESSMENT O RDER FOR AY 2011- 12 THE DETAILS OF TRANSCRIPTION PERTAINING TO THE A SSESSEE ARE MENTIONED. FURTHER, STATEMENT OF SH. ATUL BANSAL WAS ALSO RECO RDED ON 9/10.11.2011 U/S 132(4) OF THE ACT. SPECIFIC QUESTI ONS (Q 31 & 32- PAGE 2 OF THE ASSESSMENT ORDER) WAS ASKED FROM SH. ATUL BA NSAL IN RESPECT OF TRANSACTIONS CONTAINED IN THOSE SMS EXCHANGES WITH THE ASSESSEE SH. JAGJIT SINGH. THOSE TRANSACTIONS CONTAINED TRANSFER OF FUNDS BETWEEN THE ASSESSEE AND ABW DEVELOPERS PVT. LTD., ATUL BANSAL AND GROUP CONCERNS. THOSE TRANSACTIONS CONTAINED IN SMS EXCHA NGES WERE FURTHER INVESTIGATED BY THE AO. 3. THE STATEMENT OF THE ASSESSEE WAS ALSO RECORDED U/S 131 ON 15.02.2012 BY THE AO IN WHICH INTER ALIA QUESTIONS PERTAINING TO TRANSFER OF FUNDS WERE ASKED. THE INVESTIGATION OF SOURCE OF TRANSFER/RECEIPT OF FUNDS NECESSITATED EXAMINATION OF BANK ACCOUNTS OF THE ASSESSEE ALSO. THE CONSPECTUS OF INVESTIGATION RESULTED INTO ADDITION MADE BY THE AO. 4. IN THIS REGARD, RELIANCE IS PLACED ON THE DECIS ION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. MUKUNDRAY K. S HAH [2007] 290 ITR 433 (SC). IN THIS CASE, A DIARY WAS SEIZED A ST ATEMENT OF THE ASSESSEE WAS RECORDED. THE DIARY INDICATED INVESTMENT OF 26. 35 CRORE BY THE ASSESSEE IN RBI RELIEF BONDS. THE AO MADE SUBSEQUEN T INVESTIGATION AND DEEMED DIVIDEND OF RS.5.99 CRORE WAS ADDED U/S 2(22)(E). IN THIS CASE, THE HON'BLE KOLKATA HIGH COURT HELD THAT SINC E ALL THE TRANSACTIONS WERE DISCLOSED IN THE RETURNS, THE CAS E OF THE ASSESSEE DID NOT FALL UNDER CHAPTER XIVB OF THE ACT. BEFORE THE HON'BLE SC, IT WAS ARGUED THAT SINCE NO INCRIMINATING MATERIAL WAS FOU ND IN THE COURSE OF SEARCH, THE AO COULD NOT INVOKE SECTION 2(22)(E). 5. IN PARA 12 OF THE ORDER, THE HON'BLE SC HELD TH AT THE DIARY WAS IDENTIFIED IN THE COURSE OF SEARCH. IT WAS HELD THA T- 'THAT ASSESSMENT ORIGINATED ON ACCOUNT OF A SEARCH CONDUCTED UNDER SECTION 132(1) OF THE ACT. IN THAT SEARCH THE DIARY 'ML- 20' WAS IDENTIFIED. THAT IDENTIFICATION WAS THE STA RTING POINT OF CONNECTED ENQUIRIES RESULTING IN THE DETECTION OF U NDISCLOSED INCOME OF RS. 5.99 CRORES. IN OTHER WORDS, UNDISCLO SED INCOME, IN THE NATURE OF DEEMED DIVIDEND, DID NOT ARISE FROM A NY SCRUTINY PROCEEDINGS, TAX EVASION PETITIONS, SURVEYS, INFORM ATION RECEIVED FROM EXTERNAL AGENCY, ETC. THE UNDISCLOSED INCOME W AS DETECTED BY THE ASSESSING OFFICER WHOLLY AND EXCLUSIVELY AS A RESULT OF A SEARCH AND, THEREFORE, THE DEPARTMENT WAS RIGHT IN INVOKING THE PROVISIONS OF CHAPTER XIV-B.' ITA NOS.1095 TO 1098/DEL./2015 6 6. IN THIS CASE ALSO, THERE WAS IDENTIFICATION OF SMS TRANSCRIPTS BETWEEN THE ASSESSEE AND SH. ATUL BANSAL. THAT IDEN TIFICATION WAS THE STARTING POINT OF CONNECTED ENQUIRIES RESULTING IN THE DETECTION OF UNDISCLOSED INCOME. THE NATURE OF TRANSACTION RECOR DED IN SMS EXCHANGES WAS EXCHANGE OF FUNDS AND CONNECTED ENQUI RIES WERE MADE AS REGARDS SOURCE/RECEIPT OF FUNDS IN BANK ACCOUNTS AND OTHERWISE. THEREFORE, THE AO WAS JUSTIFIED IN MAKING ADDITIONS . 7. AS REGARDS PROCEEDINGS U/S 153C, RELIANCE IS PL ACED ON THE FOLLOWING DECISIONS- (I) PCIT VS. SUPER MALLS PVT. LTD. [2016] 393 ITR 557 (DELHI) (II) GANPATI FINCAP SERVICES PVT. LTD. VS. CIT [20 17] 395 ITR 692 (DELHI) (III) SSP AVIATION LTD. VS. DCIT [2012] 346 ITR 17 7 (DELHI) (IV) PCIT VS. NAU NIDH OVERSEAS PVT. LTD. [2017] 3 94 ITR 753 (DELHI) 9. LD. AR FOR THE ASSESSEE FURTHER CONTENDED THAT T HE SATISFACTION NOTE DATED 20.01.2014 PREPARED BY AO OF M/S. ABW INFRAST RUCTURE (P) LTD. AND SATISFACTION NOTE DATED 23.01.2014 PREPARED BY THE AO OF THE ASSESSEE, AVAILABLE AT PAGES 3 & 4 OF THE PAPER BOOK, ARE VER BATIM SAME AND AS SUCH, SATISFACTION NOTE RECORDED IN THE CASE OF THE ASSES SEE FAILS TO REFLECT THE BASIS OF SATISFACTION OF THE AO TO POINT OUT AS TO HOW THE D OCUMENTS ALLEGEDLY BELONGING TO THE ASSESSEE BELONGS TO HIM AND ARE IN CRIMINATING IN NATURE. 10. FOR READY PERUSAL, SATISFACTION NOTE DATED 20.0 1.2014 PREPARED BY THE AO OF M/S. ABW INFRASTRUCTURE (P) LTD. AND SATISFAC TION NOTE DATED 23.01.2014 PREPARED BY THE AO OF THE ASSESSEE ARE EXTRACTED FO R READY PERUSAL AS UNDER :- ITA NOS.1095 TO 1098/DEL./2015 7 M/S. ABW INFRASTRUCTURE LIMITED PAN AAECA54664 SATISFACTION NOTE FOR INITIATING PROCEEDINGS U/S 15 3C READ WITH SECTION 153A OF INCOME TAX ACT, 1961 IN THE CASE OF PERSONS OTHER THEN THE PERSON SEARCH M/S. ABW INFRASTRUCTURE LTD. PAN : AAECA54664 IN WHICH CASE ACTION U/S 132 WAS CONDUCTED ON 9.11.201 1 20.01.2014 ACTION U/S 132 OF THE INCOME TAX ACT, 19 61 WAS CARRIED OUT IN THE CASE OF M/S. INFRASTRUCTURE LTD. ON 09.1 1.2011. THIS ACTION WAS CARRIED OUT AT THE BUSINESS PREMISES OF M/S ABW INFRASTRUCTURE LTD. AND AT THE RESIDENTIAL PREMISES OF THE ATUL BANSAL, DIRECTOR OF THIS COMPANY. DURING THE COURSE OF SEARCH ACTION VARIOU S BOOKS OF ACCOUNT AND DOCUMENTS ETC WERE FOUND AND SEIZED. WHILE EXAMINING THE SEIZED MATERIAL OF ABW INFRASTR UCTURE PVT. LTD. AND SHRI ATUL BANSAL WHERE ACTION U/S 132 OF THE IN COME TAX ACT, 1961 WAS TAKEN ON 09.11.2011, IT WAS FOUND THAT FOLLOWIN G DOCUMENTS BELONGING TO SH. JAJIT SINGH WERE FOUND : 1. TRANSCRIPT AND DIGITAL COPY OF SMS SEIZED AS PER ANNEXURE A-7 OF THE PANCHNAMA PREPARED. 2. TRANSACTION WITH M/S ABW INFRASTRUCTURE LIMITED AS PER THE SEIZED COMPUTERIZED DATA AS PER ANNEXURE A-16 A SATISFACTION TO THIS EFFECT WAS RECORDED BY THE A O AND KEPT IN THE FILE OF SHRI JAJIT SINGH. I HAVE EXAMINED THE ABOVE NOTED SEIZED DOCUMENTS AN D I FIND THAT THOSE DOCUMENTS BELONG TO SH JAJIT SINGH - PAN: AFTPS0204 A. AFTER EXAMINING THE CONTENTS OF THESE DOCUMENTS I AM SATI SFIED THAT PROCEEDINGS U/S 153C READ WITH SECTION 153A OF THE ACT ARE REQUIRED TO BE INITIATED IN THIS CASE. ACCORDINGLY, NOTICES U/S 153C READ WITH SECTION 153A OF THE ACT HAS BEEN ISSUED FOR THE ASSESSMENTS YEARS 2006-07 TO 2011-12. SATISFACTION NOTE FOR INITIATING PROCEEDINGS U/S 1 53C READ WITH SECTION 153A OF INCOME TAX ACT, 1961 IN THE CASE OF SHRI JA JIT SINGH, PAN : AFTPS0204A 23.01.2014 ACTION U/S 132 OF THE INCOME TAX ACT, 19 61 WAS CARRIED OUT IN THE CASE OF M/S. INFRASTRUCTURE LTD. ON 09.1 1.2011. THIS ACTION WAS CARRIED OUT AT THE BUSINESS PREMISES OF M/S ABW INFRASTRUCTURE LTD. AND AT THE RESIDENTIAL PREMISES OF THE ATUL BANSAL, DIRECTOR OF THIS ITA NOS.1095 TO 1098/DEL./2015 8 COMPANY. DURING THE COURSE OF SEARCH ACTION VARIOU S BOOKS OF ACCOUNT AND DOCUMENTS ETC WERE FOUND AND SEIZED. SATISFACTION NOTE OF JAGJIT SINGH WHILE EXAMINING THE SEIZED MATERIAL OF ABW INFRASTR UCTURE PVT. LTD. AND SHRI ATUL BANSAL WHERE ACTION U/S 132 OF THE IN COME TAX ACT, 1961 WAS TAKEN ON 09.11.2011, IT WAS FOUND THAT FOLLOWIN G DOCUMENTS BELONGING TO SH. JAJIT SINGH WERE FOUND : 1. TRANSCRIPT AND DIGITAL COPY OF SMS SEIZED AS PER ANNEXURE A-7 OF THE PANCHNAMA PREPARED. 2. TRANSACTION WITH M/S ABW INFRASTRUCTURE LIMITED AS PER THE SEIZED COMPUTERIZED DATA AS PER ANNEXURE A-16 A SATISFACTION TO THIS EFFECT WAS RECORDED BY THE A O ASSESSING THE PERSON(S) SEARCHED AND KEPT IN THE FILE OF SAID PER SON SEARCHED VIZ. ABW INFRASTRUCTURE PVT. LTD. AND SHRI ATUL BANSAL. I HAVE EXAMINED THE ABOVE NOTED SEIZED DOCUMENTS AN D I FIND THAT THOSE DOCUMENTS BELONG TO SH JAJIT SINGH - PAN: AFTPS0204 A. AFTER EXAMINING THE CONTENTS OF THESE DOCUMENTS I AM SATI SFIED THAT PROCEEDINGS U/S 153C READ WITH SECTION 153A OF THE ACT ARE REQUIRED TO BE INITIATED IN THIS CASE. ACCORDINGLY, NOTICES U/S 153C READ WITH SECTION 153A OF THE ACT ARE BEING ISSUED FOR THE ASSESSMENT S YEARS 2006-07 TO 2011-12. 11. WHEN WE EXAMINE AFORESAID TWO SATISFACTION NOTE S, ONE RECORDED IN THE CASE OF SEARCHED PERSON AND ANOTHER IN THE CASE OF SUCH OTHER PERSON, ASSESSEE IN THIS CASE, REFERRED IN PROVISIONS CONTAINED U/S 153C(1), IT IS UNDISPUTED FACT ON RECORD THAT THE SATISFACTION NOTE OF THE SEARCHE D PERSON IS DATED 20.01.2014 AND IN SUCH CIRCUMSTANCES, THE DATE OF HANDING OVER THE SEIZED MATERIAL TO THE AO OF THE PRESENT ASSESSEE IS TO BE TREATED THE DAT E OF SEARCH. IN OTHER WORDS, BEFORE 20.01.2014, THE INCRIMINATING MATERIAL, IF A NY, PERTAINING TO THE ASSESSEE WAS REQUIRED TO BE HANDED OVER TO THE AO OF THE ASSESSEE. IN THESE CIRCUMSTANCES, SIX YEARS PERIOD IS TO BE RECKONED WITH FROM THE DATE OF HANDING OVER OF THE DOCUMENTS TO THE AO OF THE ASSESSEE I.E.20.1.2014 A ND AS SUCH, AO WAS ITA NOS.1095 TO 1098/DEL./2015 9 EMPOWERED TO ISSUE THE NOTICES U/S 153C FOR AYS 200 8-09 TO 2013-14 ONLY THAT TOO SUBJECT TO THE UNEARTHING OF INCRIMINATING MATE RIAL HAVING REFLECTION ON THE INCOME OF THE ASSESSEE.. 12. HONBLE JURISDICTIONAL HIGH COURT IN CASE OF CIT VS. RRJ SECURITIES LTD. (2015) 380 ITR 612 (DELHI) HELD THAT : 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/DOC UMENTS BELONGING TO THE ASSESSEE (BEING THE PERSON OTHER THAN THE ONE S EARCHED) TO THE AO HAVING JURISDICTION TO ASSESS THE SAID ASSESSEE. 13. NOW, WHEN WE EXAMINE THE SATISFACTION NOTE RECO RDED BY THE AO IN CASE OF OTHER PERSON I.E. ASSESSEE IN THIS CASE, FOLLOWI NG TWO DOCUMENTS ALLEGEDLY BELONGING TO THE ASSESSEE WERE FOUND :- 1. TRANSCRIPT AND DIGITAL COPY OF SMS SEIZED AS PE R ANNEXURE A-7 OF THE PANCHNAMA PREPARED. 2. TRANSACTION WITH M/S ABW INFRASTRUCTURE LIMITED AS PER THE SEIZED COMPUTERIZED DATA AS PER ANNEXURE A-16 14. ON THE BASIS OF AFORESAID TWO DOCUMENTS, AO REC ORDED HIS SATISFACTION AS UNDER :- I HAVE EXAMINED THE ABOVE NOTE SEIZED DOCUMENTS AN D I FIND THAT THESE DOCUMENTS BELONG TO SH. JAGJIT SINGH PAN : AFTPS0 204A. AFTER EXAMINING THE CONTENTS OF THESE DOCUMENTS I AM SATI SFIED THAT PROCEEDINGS U/S 153C READ WITH SECTION 153A ARE REQ UIRED TO BE INITIATED IN THIS CASE. ACCORDINGLY, NOTICE U/S 153C READ WI TH SECTION 153A OF THE ACT HAS BEEN ISSUED FOR THE ASSESSMENT YEARS 2006-0 7 TO 2011-12. 15. WHEN WE EXAMINE THE SATISFACTION NOTE DATED 20. 01.2014 PREPARED BY THE AO IN CASE OF SEARCHED PERSON, AO OF SEARCHED P ERSON RECORDED THE FACT ITA NOS.1095 TO 1098/DEL./2015 10 THAT, TRANSCRIPT AND DIGITAL COPY OF SMS AS PER ANNEXURE A-7 OF PANCHNAMA AND TRANSACTION WITH M/S. ABW INFRASTRUCTURE (P) LT D. AS PER SEIZED COMPUTERIZED DATA REFERRED IN ANNEXURE A-16 BELONGS TO MR. JAGJIT SINGH, ASSESSEE IN THIS CASE. 16. NOW, BARE PERUSAL OF THE SATISFACTION NOTE DOES NOT INDICATE AS TO HOW AND UNDER WHAT CIRCUMSTANCES AO OF THE ASSESSEE MAD E HIMSELF SATISFIED THAT THE AFORESAID ALLEGED DOCUMENTS BELONG TO ASSESSEE AND HOW THEY ARE INCRIMINATING IN NATURE. FURTHERMORE, AO HAS NOWHE RE RECORDED THE FACT THAT AS TO HOW THE AFORESAID DOCUMENTS DO NOT BELONG TO M/S . ABW INFRASTRUCTURE (P) LTD. AND HOW AND UNDER WHAT CIRCUMSTANCES, THE SAME DO NOT BELONG TO SEARCHED PERSON RATHER MECHANICALLY RECORDED IN THE SATISFACTION NOTE THAT THESE AFORESAID DOCUMENTS BELONG TO ASSESSEE. 17. HONBLE DELHI HIGH COURT IN THE CASE OF PEPSICO INDIA HOLDINGS PRIVATE LTD. VS. ACIT 370 ITR 295 DISCUSSED THE ISSUE AS TO HOW THE LIABILITY OF SUCH OTHER PERSON, THE ASSESSEE IN THIS CASE, CA N BE FASTENED ON THE BASIS OF SEIZED DOCUMENTS FROM SEARCHED PERSON, THE OPERATIV E PART OF WHICH IS EXTRACTED FOR READY PERUSAL AS UNDER :- 4. BEFORE WE EXAMINE THESE WRIT PETITIONS IN DETAI L IT WOULD BE PERTINENT TO POINT OUT THAT RECENTLY IN THE CASE OF PEPSI FOODS PVT. LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX, WP (C) NO .415/2014 AND OTHER CONNECTED MATTERS, THIS COURT HAD OCCASION TO EXAMINE THE VERY PROVISIONS WHICH ARE UNDER CONSIDERATION IN THE MAT TERS BEFORE US. IN THE JUDGEMENT DELIVERED ON 07.08.2014 IN THE CASE O F PEPSI FOODS PVT. LTD.(SUPRA), AFTER EXAMINING THE PROVISIONS OF SECT IONS 153C, 132(4A)(I) & 292C(1)(I) OF THE SAID ACT, THIS COURT HAD OBSERV ED AS UNDER: ITA NOS.1095 TO 1098/DEL./2015 11 6. ON A PLAIN READING OF SECTION 153C, IT IS EVIDE NT THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON MUST BE S ATISFIED THAT INTER ALIA ANY DOCUMENT SEIZED OR REQUISITIONE D BELONGS TO A PERSON OTHER THAN THE SEARCHED PERSO N. IT IS ONLY THEN THAT THE ASSESSING OFFICER OF THE SEARCHE D PERSON CAN HANDOVER SUCH DOCUMENT TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON (OTHER T HAN THE SEARCHED PERSON). FURTHERMORE, IT IS ONLY AFTER SUC H HANDING OVER THAT THE ASSESSING OFFICER OF SUCH OTH ER PERSON CAN ISSUE A NOTICE TO THAT PERSON AND ASSESS OR RE- ASSESS HIS INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. THEREFORE, BEFORE A NOTICE UNDER SECT ION 153C CAN BE ISSUED TWO STEPS HAVE TO BE TAKEN. THE FIRST STEP IS THAT THE ASSESSING OFFICER OF THE PERSON WHO IS SEARCHED MUST ARRIVE AT A CLEAR SATISFACTION THAT A DOCUMENT SEIZED FROM HIM DOES NOT BELONG TO HIM BUT TO SOME OTHER P ERSON. THE SECOND STEP IS AFTER SUCH SATISFACTION IS ARRI VED AT THAT THE DOCUMENT IS HANDED OVER TO THE ASSESSING OFFICE R OF THE PERSON TO WHOM THE SAID DOCUMENT BELONGS. IN THE PRESENT CASES IT HAS BEEN URGED ON BEHALF OF THE PE TITIONER THAT THE FIRST STEP ITSELF HAS NOT BEEN FULFILLED. FOR THIS PURPOSE IT WOULD BE NECESSARY TO EXAMINE THE PROVIS IONS OF PRESUMPTIONS AS INDICATED ABOVE. SECTION 132(4A)(I) CLEARLY STIPULATES THAT WHEN INTER ALIA ANY DOCUMENT IS FOU ND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE O F A SEARCH IT MAY BE PRESUMED THAT SUCH DOCUMENT BELONGS TO SU CH PERSON. IT IS SIMILARLY PROVIDED IN SECTION 292C(1) (I). IN OTHER WORDS, WHENEVER A DOCUMENT IS FOUND FROM A PE RSON WHO IS BEING SEARCHED THE NORMAL PRESUMPTION IS THA T THE SAID DOCUMENT BELONGS TO THAT PERSON. IT IS FOR THE ASSESSING OFFICER TO REBUT THAT PRESUMPTION AND COME TO A CON CLUSION OR SATISFACTION THAT THE DOCUMENT IN FACT BELONGS TO SOMEBODY ELSE. THERE MUST BE SOME COGENT MATERIAL AVAILABLE WITH THE ASSESSING OFFICER BEFORE HE/SHE ARRIVES AT THE SATISFACTION THAT THE SEIZED DOCUMENT DOES NOT BELONG TO THE SEARCHED PERSON BUT TO SOMEBODY ELSE. SURMISE A ND CONJECTURE CANNOT TAKE THE PLACE OF SATISFACTION. XXXXXXXXXXXXXXXXXXXX 11. IT IS EVIDENT FROM THE ABOVE SATISFACTION NOTE THAT APART FROM SAYING THAT THE DOCUMENTS BELONGED TO THE PETI TIONER AND THAT THE ASSESSING OFFICER IS SATISFIED THAT IT IS A FIT CASE FOR ISSUANCE OF A NOTICE UNDER SECTION 153C, THERE IS ITA NOS.1095 TO 1098/DEL./2015 12 NOTHING WHICH WOULD INDICATE AS TO HOW THE PRESUMPT IONS 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 T HE WORDS I AM SATISFIED IN THE ORDER OR THE NOTE WOULD NOT MEET THE REQUIREMENT OF THE CONCEPT OF SATISFACTION AS USED IN SECTION 153C OF THE SAID ACT. THE SATISFACTION NOTE ITSELF MUST DISPLAY THE REASONS OR BASIS FOR THE CONCLUSION THA T THE ASSESSING OFFICER OF THE SEARCHED PERSON IS SATISFI ED THAT THE SEIZED DOCUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. WE ARE AFRAID, THAT GOING THROUGH THE CONTENTS OF THE SATISFACTION NOTE, WE ARE UNABLE TO DISCERN ANY SATISFACTION OF THE KIND REQUIRED UNDER SECTI ON 153C OF THE SAID ACT. 18. WHEN WE EXAMINE THE FACTS OF THE PRESENT CASE I N THE LIGHT OF THE RATIO LAID DOWN BY HONBLE HIGH COURT IN CASES OF CIT VS. RRJ SECURITIES LTD. AND PEPSICO INDIA HOLDINGS PRIVATE LTD. VS. ACIT (SUPRA), IT LEADS TO THE IRRESISTIBLE CONCLUSION THAT FIRSTLY, AO OF THE SEA RCHED PERSON, NAMELY, M/S. ABW INFRASTRUCTURE (P) LTD. MUST ARRIVE AT A CATEGO RIC SATISFACTION THAT A DOCUMENT SEIZED FROM HIM DOES NOT BELONG TO HIM (SE ARCHED PERSON) BUT TO SOME OTHER PERSON AND SECOND REQUIREMENT IS AFTER S UCH SATISFACTION IS ARRIVED AT THAT THE DOCUMENT IS HANDED OVER TO THE PERSON T O WHOM THE SAID DOCUMENT BELONGS. 19. IN THE INSTANT CASE, BOTH THE AFORESAID CONDITI ONS HAVE NOT BEEN SATISFIED BY THE AO OF THE SEARCHED PERSON AND THEN AO OF THE OTHER PERSON, THE ASSESSEE IN THIS CASE, HAS MECHANICALLY PROCEEDED TO INITIAT E THE PROCEEDINGS U/S 153C AND 153A BY MERELY RECORDING THE WORD SATISFACTION THAT THE SEIZED DOCUMENTS BELONG TO ASSESSEE. IN OTHER WORDS, IT IS DIFFICUL T TO MAKE OUT FROM THE ITA NOS.1095 TO 1098/DEL./2015 13 SATISFACTION NOTE RECORDED IN CASE OF SEARCHED PERS ON AND IN CASE OF OTHER PERSON, THE REQUISITE SATISFACTION AS REQUIRED U/S 153C OF THE ACT. WE ARE CONSTRAINED TO RECORD THAT BOTH THE SATISFACTION NO TE DATED 20.01.2014 AND 23.01.2014 RECORDED IN CASE OF SEARCHED PERSON AND IN CASE OF SUCH OTHER PERSON ARE IDENTICAL AND ARE NOT IN CONSONANCE WITH THE PROVISIONS CONTAINED U/S 153C OF THE ACT. FURTHERMORE, THE AO HAS ALSO FAIL ED TO CONCLUDE AS TO HOW THE ALLEGED DOCUMENTS WERE INCRIMINATING IN NATURE IN ORDER TO ASSESS THE INCOME OF THE ASSESSEE U/S 153C OF THE ACT. SO, IN THE ABSENCE OF EXISTENCE OF ANY INCRIMINATING MATERIAL, POWER U/S 153C CANNOT B E INVOKED. 20. HONBLE SUPREME COURT IN CASE OF CIT VS. SINHGAD TECHNICAL EDUCATION SOCIETY 397 ITR 344 HELD THAT IN THE ABSENCE OF INCRIMINATING MATERIAL FROM THE SEARCHED PREMISES OF A THIRD PERS ON BELONGING TO SUCH OTHER PERSON PERTAINING TO SUCH ASSESSMENT YEAR, PROVISIO NS CONTAINED U/S 153C ARE NOT ATTRACTED. OPERATIVE PART OF WHICH IS EXTRACT ED FOR READY PERUSAL AS UNDER :- 18. THE ITAT PERMITTED THIS ADDITIONAL GROUND BY G IVING A REASON THAT IT WAS A JURISDICTIONAL ISSUE TAKEN UP ON THE BASIS OF FACTS ALREADY ON THE RECORD AND, THEREFORE, COUL D BE RAISED. IN THIS BEHALF, IT WAS NOTED BY THE ITAT THAT AS PE R THE PROVISIONS OF SECTION 153C OF THE ACT, INCRIMINATIN G MATERIAL WHICH WAS SEIZED HAD TO PERTAIN TO THE ASSESSMENT Y EARS IN QUESTION AND IT IS AN UNDISPUTED FACT THAT THE DOCU MENTS WHICH WERE SEIZED DID NOT ESTABLISH ANY CO-RELATION , DOCUMENT-WISE, WITH THESE FOUR ASSESSMENT YEARS, SI NCE THIS REQUIREMENT UNDER SECTION 153C OF THE ACT IS ESSENT IAL FOR ASSESSMENT UNDER THAT PROVISION, IT BECOMES A JURIS DICTIONAL FACT. WE FIND THIS REASONING TO BE LOGICAL AND VALI D, HAVING REGARD TO THE PROVISIONS OF SECTION 1S3C OF THE ACT . PARA 9 OF THE ORDER OF THE ITAT REVEALS THAT THE ITAT HAD SCA NNED THROUGH THE SATISFACTION NOTE AND THE MATERIAL WHIC H WAS ITA NOS.1095 TO 1098/DEL./2015 14 DISCLOSED THEREIN WAS CULLED OUT AND IT SHOWED THAT THE SAME BELONGS TO ASSESSMENT YEAR 2004-05 OR THEREAFTER. A FTER TAKING NOTE OF THE MATERIAL IN PARA 9 OF THE ORDER, THE POSITION THAT EMERGES THEREFROM IS DISCUSSED IN PARA 10. IT WAS SPECIFICALLY RECORDED THAT THE COUNSEL FOR THE DEPA RTMENT COULD NOT POINT OUT TO THE CONTRARY. IT IS FOR THIS REASON THE HIGH COURT HAS ALSO GIVEN ITS IMPRIMATUR TO THE AFO RESAID APPROACH OF THE TRIBUNAL. THAT APART, LEARNED SENIO R COUNSEL APPEARING FOR THE RESPONDENT, ARGUED THAT NOTICE IN RESPECT OF ASSESSMENT YEARS 2000-01 AND 2001-02 WAS EVEN TIME BARRED. 21. WITHOUT PREJUDICE, THE LD. AR FOR THE ASSESSEE FURTHER CONTENDED THAT SEIZED DOCUMENTS, REFERRED TO BY THE AO, DO NOT BEL ONG TO THE ASSESSEE AND REFERRED TO HIS APPLICATION DATED 06.11.2018, AVAIL ABLE AT PAGES 59 & 60 OF THE PAPER BOOK, WHEREIN AO WAS REQUESTED TO PROVIDE COP Y OF ALLEGED SEIZED DOCUMENTS I.E. ANNEXURE A-7 TO A-16 ON THE BASIS OF WHICH NOTICE U/S 153C OF THE ACT WERE ISSUED. IT IS UNDISPUTED FACT THAT VI DE COMMUNICATION DATED 04.01.2019, AVAILABLE AT PAGES 1 & 2 OF THE PAPER B OOK, AO STATED TO HAVE PROVIDED COPY OF ANNEXURE A-7 TO THE ASSESSEE AND S TATED THAT THE COPY OF ANNEXURE A-16 MAY BE PROVIDED ONLY AFTER FOLLOWING THE PROCEDURE VIZ. MAZHARNAMA AS IT IS IN THE FORM OF DVD SEAL PACKED IN THE ENVELOPE. BUT UNDISPUTEDLY COPIES OF ANNEXURE A-8 TO A-16 HAVE NE VER BEEN PROVIDED TO THE ASSESSEE. 22. WHEN AO OF THE SEARCHED PERSON AS WELL AS THE A O OF THE ASSESSEE IS THE SAME AND HE HAS PREPARED BOTH THE SATISFACTION NOTE , IT IS DIFFICULT TO MAKE OUT AS TO HOW THE AO OF THE SEARCHED PERSON REACHED THE CONCLUSION THAT THE DOCUMENT ACTUALLY BELONGS TO THE ASSESSEE. SO ULTI MATELY, AO MADE ADDITION ITA NOS.1095 TO 1098/DEL./2015 15 ON THE BASIS OF ANNEXURE A-7 WHICH IS ENTRY RECORDE D IN THE BOOKS OF ACCOUNT OF M/S. ABW GROUP SHOWING PAYMENT OF RS.21 CRORES H AVING BEEN GIVEN BY M/S. ABW INFRASTRUCTURE (P) LTD. TO THE ASSESSEE DU RING 28.05.2010 TO 03.11.2011. FIRST OF ALL, THE AFORESAID DOCUMENTS WHICH ARE UNDISPUTEDLY COPIES OF SEIZED BOOKS OF ACCOUNT OF M/S. AWB GROUP DO NOT BELONG TO ASSESSEE AND SECONDLY, IT CANNOT BE TREATED AS INCR IMINATING MATERIAL BY ANY STRETCH OF IMAGINATION EVEN. SO, IN THESE CIRCUMST ANCES, JURISDICTION ASSUMED BY THE AO IS BAD IN LAW AND AS SUCH, ASSESSMENT IS LIABLE TO BE QUASHED ON THE GROUND OF LACK OF JURISDICTION WITH THE AO. 23. LD. DR FOR THE REVENUE BY RELYING UPON THE STAT EMENT OF ATUL BANSAL RECORDED ON 9/10.11.2011 U/S 132 (4) OF THE ACT AND STATEMENT OF THE ASSESSEE U/S 131 ON 15.02.2012 CONTENDED THAT THE DETAILED I NVESTIGATION RESULTED INTO ADDITION MADE BY THE AO AND RELIED UPON THE DECISIO N RENDERED BY HONBLE SUPREME IN CASE OF CIT VS. MUKUNDRAY K. SHAN (2007) 290 ITR 433 (SC) . BUT WE ARE OF THE CONSIDERED VIEW THAT WHEN THE ASS ESSMENT OR REASSESSMENT, AS THE CASE MAY BE, HAS BEEN MADE U/S 153C, THE NECESS ARY REQUIREMENTS TO PROCEED WITH SUCH INITIATION OF ASSESSMENT PROCEEDI NGS MUST BE FULFILLED. BUT, IN THE INSTANT CASE, AS DISCUSSED IN THE PRECEDING PARAS, THE AO HAS FAILED TO RECORD THE SATISFACTION NOTE AS REQUIRED U/S 153C R ATHER MECHANICALLY RECORDED THE SATISFACTION AND MADE THE ASSESSMENT. THE CONT ENTION RAISED BY THE LD. DR AND CASE LAWS RELIED UPON ARE NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NOS.1095 TO 1098/DEL./2015 16 24. AT THE SAME TIME, SMS MENTIONED BY THE AO AT PA GE 2 OF THE ASSESSMENT ORDER FOUND ON THE MOBILE PHONE OF ATUL BANSAL, SEARCHED PERSON, ARE RELEVANT ONLY FOR AY 2012-13 AND NOT AY 2011-12 AS THE DATE OF SEARCH ON THE BASIS OF WHICH ASSESSMENT U/S 153C WAS INITIATE D ON 09.11.2011. MOREOVER, CIT (A) IN PARA 5.2 OF AY 2011-12 FAILED TO CLARIFY IF ANY INCRIMINATING MATERIAL WAS SEIZED FOR THIS YEAR. 25. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT ASSESSMENT FRAMED BY THE ASSESSEE U/S 153 A R/W SECTION 153C FOR AYS 2009-10, 2010-11 AND 2011-12 IS BAD IN LAW FOR WANT OF JURISDICTIONAL ERROR WITH THE AO. AT THE SAME TIME, ASSESSMENT FR AMED U/S 143 (3) FOR AY 2012-13 IS ALSO BAD IN LAW BECAUSE DATE OF HANDING OVER THE SEIZED DOCUMENT IS 20.01.2014 AND THE ASSESSMENT IN THIS CASE WAS REQU IRED TO BE FRAMED U/S 153C OF THE ACT. BECAUSE HONBLE JURISDICTIONAL HIGH CO URT IN CASE OF CIT VS. RRJ SECURITIES LTD. (SUPRA) HAS CATEGORICALLY HELD THAT, 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 CONSTR UED 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 JURISDICTIO N TO ASSESS THE SAID ASSESSEE. 26. SO, IN THESE CIRCUMSTANCES, THE ASSESSMENT FRAM ED U/S 143(3) OF THE ACT FOR AY 2012-13, WHICH WAS OTHERWISE REQUIRED TO BE FRAMED U/S 153C, IS ALSO NOT SUSTAINABLE IN THE EYES OF LAW ON ACCOUNT OF JU RISDICTIONAL ERROR. ITA NOS.1095 TO 1098/DEL./2015 17 27. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, WE AR E OF THE CONSIDERED VIEW THAT WITHOUT GOING INTO THE MERITS OF THE CASE , ASSESSMENT ORDERS FRAMED U/S 153C R/W SECTION 153A OF THE ACT FOR AYS 2009-1 0, 2010-11 AND 2011-12 AND U/S 143(3) OF THE ACT FOR AY 2012-13 ARE BAD IN LAW AND AS SUCH NOT SUSTAINABLE, HENCE QUASHED. CONSEQUENTLY, ALL THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 1 ST DAY OF OCTOBER, 2019. SD/- SD/- (R.K. PANDA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 1 ST DAY OF OCTOBER, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)- XXVI , NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.