M/s. United Engineers, Rajkot, Rajkot V. The Deputy Commissioner of Income Tax, Central Circle, Rajkot, Rajkot

ITA 305/RJT/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8627 (ITAT-RAJKOT)
• Duration Of Justice: 2 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-06-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 24-08-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH SINGH
• Keywords: Search and seizure; Loose papers; Document seized; Opportunity of being heard; Question of law; Assessment record; Right to appeal; Documents seized
• Section: 271(1)(c); 143(3); 153A; 274; 139(1); 142(2A); 13; 153C; 147; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, (CONDUCTED THROUGH E COURT AT AHMEDABAD) BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER SR. NO. ITA NO. ASSTT. YEAR NAME OF APPELLANT NAME OF RESPONDENT 1. 305/RJT/2018 2012-13 M/S UNITED ENGINEERS, 3, UMAKANT PANDIT UDYOG NAGAR, OPP. KISHAN TRAILORS, RAJKOT. PAN NO.AAAFU4996K D.C.I.T., CENTRAL CIRCLE-1, RAJKOT. 2-3. 388-389/RJT/2018 2008-09 & 2009-10 M/S REVA INFRASTRUCTURE INCORPORATION, 7,ASHISH COMMERCIAL COMPLEX, SARDARNAGAR MAIN ROAD, RAJKOT PAN NO.AAIFR1245C A.C.I.T., CENTRAL CIRCLE-1, RAJKOT. 4-5. 150-151/RJT/2019 2010-11 & 2011-12 -DO- D.C.I.T, CENTRAL CIRCLE-1, RAJKOT. 6- 12 312 TO 318/RJT/2018 (2009-10 TO (2015-16) M/S. SAJAVAT SALES AGENCY, 7, ASHISH COMMERCIAL COMPLEX, SARDARNAGAR MAIN ROAD, RAJKOT. PAN NO.ABGFS9927H -DO- 13. 412/RJT/2017 2008-09 -DO- A.C.I.T., CENTRAL CIRCLE-1, RAJKOT. 14- 16 302-304/RJT/2018 2009-10, 2014-15 & 2015-16 SHRI DHARMESH K. KHOONT, OM, BLOCK NO.5/10, ASTRON SOCIETY MAIN ROAD, RAJKOT. PAN NO.ADSPK5036H -DO- ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 2 17- 19 319 TO 321/RJT/2018 2011-12, 2014- 15 & 2015-16 SHRI BHAVESH KIRITBHAI KHOONT, OM, BLOCK NO.5/10, ASTRON SOCIETY MAIN ROAD, RAJKOT. PAN NO.ADWPK6664K -DO- (APPLICANT) (RESPONENT) ASSESSEE BY : SHRI P.C. YADAV, WITH SHRI DINESH RUPRELIA, A.RS REVENUE BY : SHRI OM PRAKASH SINGH, CIT, D.R / DATE OF HEARING : 28/06/2021 / DATE OF PRONOUNCEMENT: 08/07/2021 / O R D E R PER BENCH : THE ABOVE APPEALS HAVE BEEN FILED AT THE INSTANCE OF THE DIFFERENT ASSESSEE AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME-TAX (APPEALS) ARISING IN THE MATTER OF PENALTY ORDERS PASSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (HERE- IN-AFTER REFERRED TO AS 'THE ACT') INVOLVING RESPECTIVE ASSESSMENT YEARS. 2. FIRST WE TAKE ITA NO/305/RJT/2018 FOR A.Y. 2012-13 FOR THE PURPOSE OF ADJUDICATION. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: THE COMMISSIONER OF INCOME-TAX (APPEALS)-11, AHMEDABAD ERRED IN UPHOLDING LEVY OF PENALTY OF RS.1,33,002/- U/S.271(1)(C) OF THE ACT. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND WITHDRAW ANY GROUND OF APPEAL ANY TIME UP TO THE HEARING OF THIS APPEAL. 3. THE ASSESSEE VIDE LETTER DATED 26-10-2020 HAS ALSO RAISED THE ADDITIONAL GROUND OF APPEAL WHICH READS AS UNDER: A) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON THE BASIS OF INFORMATION OBTAINED UNDER RTI DATED 24.06.2020, THE ORDER OF AO LEVYING PENALTY IS VOID AB INITIO AS THE SAME HAS BEEN ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 3 INITIATED IN PURSUANCE TO AN ORDER OF ASSESSMENT, DATED 27.12.2016, WHICH ITSELF WAS A NULLITY, AS THE APPROVAL GRANTED U/S 153D OF THE ACT IS MECHANICAL APPROVAL. B) ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE THE PENALTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT IS VOID AS NO SPECIFIC NOTICE U/S 274 HAS BEEN ISSUED BY THE AO. C) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE PENALTY ORDER IS BAD IN LAW AS THE APPROVAL OF JCIT DATED 24.05.2017 WAS AN APPROVAL WITHOUT APPLICATION OF MIND. 4. THE LEARNED AR FOR THE ASSESSEE, AT THE OUTSET, SUBMITTED THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE VIDE LETTER DATED 26-10-2020 GOES TO THE ROOT OF THE MATTER AND ALL THE FACTS RELATED TO THE ADDITIONAL GROUND ARE AVAILABLE ON THE RECORD. THEREFORE, THE SAME NEEDS TO BE ADMITTED IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC LTD. REPORTED IN 229 ITR 383 WHERE IT WAS HELD AS UNDER: UNDER SECTION 254, THE TRIBUNAL MAY, AFTER GIVING BOTH THE PARTIES TO THE APPEAL AN OPPORTUNITY OF BEING HEARD, PASS SUCH ORDERS THEREON AS IT THINKS FIT. THE POWER OF THE TRIBUNAL IN DEALING WITH APPEALS IS THUS EXPRESSED IN THE WIDEST POSSIBLE TERMS. THE PURPOSE OF THE ASSESSMENT PROCEEDINGS BEFORE THE TAXING AUTHORITIES IS TO ASSESS CORRECTLY THE TAX LIABILITY OF AN ASSESSEE IN ACCORDANCE WITH LAW. IF, FOR EXAMPLE, AS A RESULT OF A JUDICIAL DECISION GIVEN WHILE THE APPEAL IS PENDING BEFORE THE TRIBUNAL, IT IS FOUND THAT A NON-TAXABLE ITEM IS TAXED OR A PERMISSIBLE DEDUCTION IS DENIED, THERE IS NO REASON WHY THE ASSESSEE SHOULD BE PREVENTED FROM RAISING THAT QUESTION BEFORE THE TRIBUNAL FOR THE FIRST TIME, SO LONG AS THE RELEVANT FACTS ARE ON RECORD IN RESPECT OF THAT ITEM. THERE IS NO REASON TO RESTRICT THE POWER OF THE TRIBUNAL UNDER SECTION 254 ONLY TO DECIDE THE GROUNDS WHICH ARISE FROM THE ORDER OF THE COMMISSIONER (APPEALS). BOTH THE ASSESSEE AS WELL AS THE DEPARTMENT HAVE A RIGHT TO FILE AN APPEAL/CROSS OBJECTIONS BEFORE THE TRIBUNAL. THERE IS NO REASON WHY THE. TRIBUNAL SHOULD BE PREVENTED FROM CONSIDERING QUESTIONS OF LAW ARISING IN ASSESSMENT PROCEEDINGS ALTHOUGH NOT RAISED EARLIER. THE VIEW THAT THE TRIBUNAL IS CONFINED ONLY TO ISSUES ARISING OUT OF THE APPEAL BEFORE THE COMMISSIONER (APPEALS) TAKES TOO NARROW A VIEW OF THE POWERS OF THE TRIBUNAL. UNDOUBTEDLY, THE TRIBUNAL WILL HAVE THE DISCRETION TO ALLOW OR NOT ALLOW A NEW GROUND TO BE RAISED. BUT WHERE THE TRIBUNAL IS ONLY REQUIRED TO CONSIDER A QUESTION OF LAW ARISING FROM THE FACTS WHICH ARE ON RECORD IN THE ASSESSMENT PROCEEDINGS THERE IS NO REASON WHY SUCH A QUESTION SHOULD NOT BE ALLOWED TO BE RAISED WHEN IT IS NECESSARY TO CONSIDER THAT QUESTION IN ORDER TO CORRECTLY ASSESS THE TAX LIABILITY OF AN ASSESSEE. IN THE INSTANT CASE, THEREFORE, THE TRIBUNAL HAD JURISDICTION TO EXAMINE A QUESTION OF LAW WHICH AROSE FROM THE FACTS AS FOUND BY THE LOWER AUTHORITIES AND HAVING A BEARING ON THE TAX LIABILITY OF THE ASSESSEE. 5. ON THE OTHER HAND THE LEARNED DR DID NOT RAISE ANY OBJECTION ON THE ADMISSION OF THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE. ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 4 6. HEARD THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ADDITIONAL GROUND RAISED BY THE ASSESSEE IS LEGAL IN NATURE AND THEREFORE THE SAME CAN BE RAISED AT ANY STAGE IN PURSUANCE TO THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF NTPC LTD (SUPRA) . HENCE WE ADMIT THE ADDITIONAL GROUND OF APPEAL RAISED BY THE ASSESSEE AND PROCEED TO ADJUDICATE THE SAME. 7. THE ONLY INTERCONNECTED ISSUE RAISED BY THE ASSESSEE IS THAT THE LEARNED CIT (A) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE AO FOR 1,33,002.00 UNDER THE PROVISIONS OF SECTION 271(1)(C) OF THE ACT. 8. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF REAL ESTATE. THERE WAS A SEARCH UNDER SECTION 132 OF THE ACT CARRIED OUT IN THE CASE OF M/S REVA INFRASTRUCTURE INCORPORATION AT THE OFFICE PREMISES DATED 16 OCTOBER 2014. AS A RESULT OF SEARCH VARIOUS DOCUMENTS OF INCRIMINATING NATURE WERE SEIZED WHICH WERE BELONGING TO THE SEARCH PERSON AS WELL AS THE ASSESSEE. ACCORDINGLY, THE PROCEEDINGS UNDER SECTION 153C OF THE ACT WERE INITIATED IN THE NAME OF THE ASSESSEE. THE ASSESSEE HAS ACCEPTED AN INCOME OF RS. 4,43,340.00 BY OFFERING THE SAME IN THE RETURN FILED IN THE PROCEEDINGS UNDER SECTION 153C OF THE ACT. THE RETURN FILED BY THE ASSESSEE DISCLOSING THE IMPUGNED INCOME WAS ACCEPTED BY THE AO IN THE ASSESSMENT FRAMED UNDER SECTION 153C READ WITH SECTION 143(3) OF THE ACT VIDE ORDER DATED 27 DECEMBER 2016. THE AO INITIATED THE PENALTY UNDER SECTION 271(1) OF THE ACT DURING THE ASSESSMENT PROCEEDINGS WHICH CAME TO BE CONFIRMED BY THE AO IN THE PENALTY ORDER DATED 23 MAY 2017 FOR AN AMOUNT OF 1,33,002.00 BEING THE AMOUNT OF 100% OF TAX SOUGHT TO BE EVADED. 9. ON APPEAL, THE LEARNED CIT (A) ALSO CONFIRMED THE ORDER OF THE AO. 10. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A), THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 5 11. THE LEARNED AR BEFORE US HAS CHALLENGED THE PENALTY LEVIED BY THE AUTHORITIES BELOW UNDER SECTION 271(1)(C) OF THE ACT ON MERIT AS WELL AS ON THE TECHNICAL GROUND I.E. VALIDITY OF THE PENALTY ORDER WAS TESTED ON TWO COUNTS. 11.1 THE LEARNED AR ON MERIT CONTENDED THAT THERE WAS NO INCRIMINATING DOCUMENT FOUND DURING THE COURSE OF SEARCH PROCEEDINGS SUGGESTING ANY UNDISCLOSED INCOME. THIS FACT CAN ALSO BE VERIFIED FROM THE ASSESSMENT ORDER. ACCORDINGLY, IT WAS CONTENDED THAT THE INCOME OFFERED IN THE PROCEEDINGS UNDER SECTION 153C OF THE ACT WAS BASED ON THE VOLUNTARY DISCLOSURE BY THE ASSESSEE AND THEREFORE THERE CANNOT BE ANY PENALTY UNDER THE PROVISIONS OF SECTION 271(1) OF THE ACT. 11.2 THE LEARNED AR ON THE LEGAL ISSUE CONTENDED THAT THE ASSESSEE IN THE CASE ON HAND WAS NOT SUBJECT TO SEARCH PROCEEDINGS UNDER SECTION 132 OF THE ACT AND THEREFORE THERE CANNOT BE ANY PENALTY UNDER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT. THE LEARNED AR IN SUPPORT OF HIS CONTENTION RELIED ON THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF PRINCIPAL COMMISSIONER OF INCOME TAX VERSUS RAJKUMAR GULAB BADGUJAR IN TAX APPEAL NO. 897- 898- 901- 907- 914/2016 VIDE ORDER DATED 8 TH OF JANUARY 2019. 11.3 THE 2 ND FOLD OF CONTENTION OF THE LEARNED AR ON THE LEGAL POINT WAS THAT THE ASSESSMENT UNDER SECTION 153(3) READ WITH SECTION 143(3) OF THE ACT HAS BEEN FRAMED WITHOUT OBTAINING THE PROPER APPROVAL FROM THE JOINT COMMISSIONER UNDER THE PROVISIONS OF SECTION 153D OF THE ACT. THEREFORE, THE ASSESSMENT FRAMED UNDER SECTION 153(3) READ WITH SECTION 143(3) OF THE ACT IS BAD IN LAW. THUS THE LEARNED AR POINTED OUT THAT ONCE THE ASSESSMENT IN ITSELF IS BAD IN LAW AND LIABLE TO BE QUASHED, THEN THE PENALTY ARISING OUT OF SUCH ASSESSMENT ORDER IS NOT SUSTAINABLE. THUS THE PENALTY ORDER FRAMED UNDER SECTION 271(1)(C) OF THE ACT IS NOT MAINTAINABLE UNDER THE PROVISIONS OF LAW. ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 6 12. ON THE CONTRARY, THE LEARNED DR SUBMITTED THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME UNDER THE PROVISIONS OF SECTION 139(1) OF THE ACT DECLARING AT RS. NIL. THE INCOME OF RS. 4,43,340.00 WAS OFFERED TO TAX IN THE PROCEEDINGS UNDER SECTION 153C OF THE ACT BASED ON THE DOCUMENTS OF INCRIMINATING NATURE FOUND IN THE COURSE OF SEARCH IN THE CASE OF M/S REVA INFRASTRUCTURE INCORPORATION. HAD THERE NOT BEEN THE SEARCH, THE IMPUGNED AMOUNT OF INCOME WOULD NOT HAVE BEEN UNEARTHED. ACCORDINGLY, THE CONTENTION OF THE LEARNED AR THAT THERE WAS NO SURRENDER OF INCOME IN THE NAME OF THE ASSESSEE WAS NOT JUSTIFIABLE. 12.1 REGARDING THE LEGAL CONTENTION NO. 1 OF THE LEARNED AR, THE LEARNED DR SUBMITTED THAT THE PENALTY HAS BEEN LEVIED ON THE BASIS OF THE DOCUMENTS FOUND DURING THE SEARCH PROCEEDINGS. THEREFORE, THE PENALTY HAS RIGHTLY BEEN LEVIED UNDER THE PROVISIONS OF EXPLANATION 5A OF SECTION 271(1)(C) OF THE ACT. 12.2 THE LEARNED DR REGARDING THE 2 ND LEGAL CONTENTION OF THE LEARNED AR, SUBMITTED THAT THE ASSESSEE HAS NOT CHALLENGED THE VALIDITY OF THE ASSESSMENT FRAMED UNDER SECTION 153C READ WITH SECTION 143(3) OF THE ACT AND THEREFORE THE QUESTION OF VALIDITY OF THE ASSESSMENT CANNOT BE RAISED IN THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT. THE LD. DR IN SUPPORT OF HIS CONTENTIONS ALSO FILED WRITTEN SUBMISSION AND VARIOUS CASE LAWS INCORPORATED THEREIN. 13. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FIRST, WE TAKE UP THE LEGAL CONTENTION OF THE LEARNED AR FOR THE ASSESSEE FOR OUR ADJUDICATION SO AS TO WHETHER THE PENALTY CAN BE LEVIED UNDER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IN THE ASSESSMENT FRAMED UNDER SECTION 153C OF THE ACT. ADMITTEDLY THE PENALTY HAS BEEN LEVIED UNDER EXPLANATION 5A TO SECTION 271(1)(C)OF THE ACT. THIS FACT CAN BE ESTABLISHED FROM THE FINDING OF THE LEARNED CIT (A) WHICH IS EXTRACTED AS UNDER: THE ONLY GROUND OF APPEAL IS AGAINST THE LEVY OF PENALTY OF RS.1,38,990/- U/S. 271(1)(C) OF THE ACT BY THE AO. FACTS OF THE CASE IN BRIEF ARE THAT THE ENCORE GROUP PERSONS WERE SEARCHED ON 16,10.2014 U/S.132 OF THE ACT. DURING THE COURSE OF SEARCH, VARIOUS INCRIMINATING DOCUMENTS IN THE FORM OF LOOSE PAPERS, NOTE PADS, DIARIES AND HDD IMAGINGS ETC. WERE FOUND & SEIZED. SOME OF THE INCRIMINATING DOCUMENTS BELONGED TO THE APPELLANT, ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 7 THEREFORE, NOTICE U/S. 153C WAS ISSUED. IN RESPONSE TO THE SAID NOTICE, THE APPELLANT FILED RETURN SHOWING INCOME OF RS.4,43,340/- ON 21.7.2016 THE ASSESSMENT WAS MADE U/S 143(3) R.W.S. 153C VIDE ORDER DATED 27.12.2016 ACCEPTING THE RETURNED INCOME WITH INITIATION OF PENALTY U/S.271(1)(C) OF THE ACT FOR CONCEALMENT OF INCOME. THE AO LEVIED THE PENALTY OF RS.L,33,002/- I.E. EQUAL TO 100% OF THE TAX SOUGHT TO HAVE BEEN EVADED VIDE ORDER DATED 23.5.2017 AND THE APPELLANT IS IN APPEAL AGAINST THE SAID PENALTY ORDER. ONGOING THROUGH THE FACTS OF THE CASE, IT IS CLEAR THAT THE APPELLANT RETURNED THE INCOME IN RESPONSE TO NOTICE ISSUED U/S.153C OF THE ACT. THE RETURNED INCOME IS ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH. THEREFORE, THE APPELLANT'S CASE IS STRICTLY COVERED BY THE PROVISIONS OF EXPLANATION 5A OF SECTION 271(1)(C) OF THE ACT AND ACCORDING TO WHICH THE APPELLANT IS CONSIDERED DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME. THUS, THE AO IS RIGHT IN LAW & FACT IN LEVYING PENALTY U/S.271(1)(C) OF THE ACT. HENCE, PENALTY LEVIED BY THE AO IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. 13.1 THERE IS NO AMBIGUITY TO THE FACT THAT THE ASSESSMENT WAS FRAMED UNDER SECTION 153C READ WITH SECTION 143(3) OF THE ACT. THUS IT BECOMES CLEAR THAT THERE WAS NO SEARCH CONDUCTED ON THE ASSESSEE UNDER THE PROVISIONS OF SECTION 132 OF THE ACT. NOW THE CONTROVERSY ARISES FOR ADJUDICATION WHETHER THE PENALTY CAN BE LEVIED UNDER EXPLANATION 5A TO SECTION 271(1) OF THE ACT IN THE ABSENCE OF ANY SEARCH ENVISAGED UNDER SECTION 132 OF THE ACT. FOR THIS PURPOSE, WE FIND PERTINENT TO REFER THE PROVISIONS SPECIFIED IN EXPLANATION 5A TO SECTION 271(1) OF THE ACT WHICH READS AS UNDER: 271. 36A (1) IF THE 37 [ASSESSING] OFFICER OR THE 38 [***] 39 [COMMISSIONER (APPEALS)] 40 [OR THE 41 [PRINCIPAL COMMISSIONER OR] COMMISSIONER] IN THE COURSE OF ANY PROCEEDINGS UNDER THIS ACT 41A , IS SATISFIED THAT ANY PERSON XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX 80 [EXPLANATION 5A. WHERE, IN THE COURSE OF A SEARCH INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF (I) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING (HEREA FTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILISING (WHOLLY OR IN PART) HIS INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, 13.2 ON PERUSAL OF THE ABOVE PROVISION, IT IS REVEALED THAT THE PENALTY UNDER EXPLANATION 5A TO SECTION 271(1) OF THE ACT CAN BE LEVIED IN THE EVENT OF SEARCH CARRIED OUT UNDER SECTION 132 OF THE ACT. UNDOUBTEDLY, THERE WAS NO SUCH CARRIED OUT ON THE ASSESSEE. THEREFORE THE PRINCIPLES LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF RAJKUMAR GULAB BADGUJAR (SUPRA ) ARE AS SQUARELY APPLICABLE IN THE CASE ON HAND WHEREIN IT WAS HELD AS UNDER: ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 8 EXPLANATION 5A BELOW SECTION 271 OF THE ACT WOULD APPLY ONLY IN CASE OF SEARCHED PERSON. BY VIRTUE OF SUCH EXPLANATION IT MAY BE OPEN FOR THE REVENUE TO LEVY PENALTY FROM SUCH A PERSON EVEN IN A CASE WHERE THERE IS NO ADDITION TO THE INCOME DECLARED BY THE SEARCHED PERSON IN THE RETURN FILED PURSUANT TO SEARCH. NEVERTHELESS THIS SECTION IS CONFINED TO SEARCHED PERSON AND CANNOT BE EXTENDED TO THE PERSON OTHER THAN THE SEARCHED PERSON. 8 IN THE RESULT, NO QUESTION OF LAW ARISES FACTS COMMON IN ALL. ALL THE AFORESAID APPEALS ARE DISMISSED. 13.3 THE REVENUE HAS PREFERRED THE SPL BEFORE THE HONBLE SUPREME COURT IN THE CASE AS DISCUSSED ABOVE, WHICH WAS ALSO DISMISSED BY THE HONBLE SUPREME COURT VIDE ORDER DATED 4 TH SEPTEMBER 2019. 13.4 IN VIEW OF THE ABOVE, WE HOLD THAT THERE CANNOT BE ANY PENALTY UNDER EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IN A SITUATION WHERE THE ASSESSMENT WAS FRAMED UNDER SECTION 153C READ WITH SECTION 143(3)/ 147 READ WITH SECTION 143(3) OF THE ACT IN THE GIVEN FACTS AND CIRCUMSTANCES. 14. COMING TO THE 2 ND FOLD OF CONTENTION OF THE LEARNED AR THAT THE ASSESSMENT FRAMED UNDER SECTION 153C READ WITH SECTION 143(3) OF THE ACT IS BAD IN LAW AND THEREFORE NO PENALTY PROCEEDINGS CAN BE INITIATED UNDER SECTION 271(1)(C) OF THE ACT. IN THE PRESENT CASE, THE ASSESSEE HAS FILED THE INCOME TAX RETURN UNDER THE PROVISIONS OF SECTION 153C OF THE ACT DECLARING INCOME OF RS. 4,43,340.00 WHICH WAS ACCEPTED IN THE ASSESSMENT FRAMED UNDER SECTION 153C READ WITH SECTION 143(3) OF THE ACT VIDE ORDER DATED 27-12-2016 WITHOUT MAKING ANY DISALLOWANCE/ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. THUS IT IS INFERRED THAT THE ASSESSEE WAS NOT AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER AS THERE WAS NO DISALLOWANCE/ADDITION TO THE TOTAL INCOME. IN OTHER WORDS, THE ASSESSEE ACCEPTED THE ASSESSMENT FRAMED UNDER SECTION 153C READ WITH SECTION 143(3) OF THE ACT DESPITE THE FACT THAT THE PROCEDURES AS SPECIFIED UNDER SECTION 153D OF THE ACT WERE NOT COMPLIED WITH BY THE AO. 14.1 THE PROCEDURE UNDER SECTION 153D PROVIDES THAT WHERE THE ASSESSMENT ORDER U/S 153A(1)(B) OR 153B(1)(B) IS PASSED BY AO BELOW THE RANK OF JCIT, HE HAS TO SEEK APPROVAL FROM THE JCIT. THE ISSUE ARISES WHETHER ASSESSMENT/ REASSESSMENT ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 9 MADE U/S 153C REQUIRES APPROVAL FROM JCIT. IT SEEMS THAT SUCH APPROVAL IS NECESSARY BECAUSE AFTER RECEIPT OF SEIZED MATERIAL FROM THE AO OF THE PERSON SEARCHED, THE AO OF 'OTHER PERSON' 'SHALL PROCEED AGAINST SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF 'OTHER PERSON' IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A OF THE ACT, IF THE AO OF THE 'OTHER PERSON' IS SATISFIED THAT BOOKS OF ACCOUNT/ DOCUMENTS/ ASSETS SEIZED/ REQUISITIONED HAVE A BEARING ON THE DETERMINATION OF TOTAL INCOME OF SUCH 'OTHER PERSON'. THUS, AFTER INITIATION OF PROCEEDINGS U/S 153C, THE MACHINERY PROVISIONS OF SECTION 153A WILL APPLY AND, THEREFORE, APPROVAL WHEREVER REQUIRED HAS TO BE TAKEN. IN HOLDING SO, WE ALSO DRAW SUPPORT AND GUIDANCE FROM THE ORDER OF ITAT PUNE BENCH 'B' IN THE CASE OF AKIL GULAMALI SOMJI V. INCOME-TAX OFFICER, WARD 4(5), REPORTED IN [2012] 20 TAXMANN.COM 380 (PUNE) WHEREIN IT WAS HELD AS UNDER: ON PERUSAL OF THE PROVISIONS LAID DOWN UNDER SECTION 153C, IT IS APPARENT THAT AFTER ISSUANCE OF NOTICE UNDER SECTION 153C, THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON (AGAINST WHICH INCRIMINATING MATERIAL HAS BEEN FOUND DURING THE COURSE OF SEARCH CONDUCTED ON A PERSON) ASSESS OR RE-ASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A. SECTION 153B TALKS ABOUT TIME LIMIT FOR COMPLETION OF ASSESSMENT UNDER SECTION 153A, WHEREAS SECTION 153D TALKS ABOUT NECESSITY OF PRIOR APPROVAL FOR FRAMING ASSESSMENT IN CASE OF SEARCH OR REQUISITION. THUS THE PROVISIONS LAID DOWN UNDER SECTION 153D ARE VERY MUCH APPLICABLE IN CASE OF ASSESSMENT OF INCOME OF ANY OTHER PERSON (I.E., THE PERSON OTHER THAN THE PERSON SEARCHED). 14.2 ADMITTEDLY, THE ASSESSMENT UNDER SECTION 153C READ WITH SECTION 143(3) OF THE ACT HAS BEEN FRAMED BY THE ACIT AFTER OBTAINING THE APPROVAL FROM THE JOINT COMMISSIONER AS PROVIDED UNDER SECTION 153D OF THE ACT. THIS FACT CAN BE VERIFIED FROM THE ORDER OF THE AO WHICH IS REPRODUCED AS UNDER: THIS ORDER IS PASSED AFTER OBTAINING APPROVAL OF THE JOINT COMMISSIONER OF INCOME- TAX, CENTRAL RANGE, RAJKOT, WHICH WAS CONVEYED, VIDE HIS APPROVAL LETTER NO.JCIT/CR/RJT/PENALTY APPROVAL/271(1)(C)/25-32/2017-18/32 DATED 18.05.2017. 14.3 TO DECIDE THE ISSUE ON HAND, IT IS IMPORTANT TO NOTE CERTAIN FACTS WHICH ARE LISTED BELOW: I. THE ACIT HAS FORWARDED THE DRAFT ORDERS TO THE JOINT COMMISSIONER DATED 27 DECEMBER 2016 THROUGH THE EMAIL. II. THE TIME MENTION IN THE EMAIL IS 13:29. III. ONLY DRAFT ORDERS WERE SENT FOR THE APPROVAL THROUGH THE EMAIL. IN ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 10 OTHER WORDS THE ENTIRE ASSESSMENT RECORDS WERE NOT SENT TO THE JOINT COMMISSIONER FOR HIS APPROVAL. IV. THE APPROVAL WAS SOUGHT BY THE ACIT THROUGH SINGLE EMAIL WITH RESPECT OF 10 DIFFERENT ASSESSEE. V. THE APPROVAL LETTER BY THE JOINT COMMISSIONER WAS DATED 27 DECEMBER 2016. 14.4 THE ABOVE FACTS CAN BE VERIFIED FROM RTI FILED BY THE LD. AR WHICH IS PLACED ON RECORD AND THE LD. DR HAS ALSO NOT CONTROVERTED THE SAME. 14.5 THE ISSUE WHICH WE HAVE TO DECIDE WHETHER THE APPROVAL ON HAND GIVEN BY THE JOINT COMMISSIONER IS FULFILLING THE MANDATE OF THE PROVISIONS OF SEC. 153D OF THE ACT VIS--VIS THE LEGISLATIVE INTENT OF INSERTING THE SAID SECTION IN THE STATUTE. THE PROVISIONS OF SECTION 153D OF THE ACT READ AS UNDER: 'NO ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE PASSED BY AN ASSESSING OFFICER BELOW THE RANK OF JOINT COMMISSIONER IN RESPECT OF EACH ASSESSMENT YEAR REFERRED TO IN CLAUSE (B) OF SECTION 153A OR THE ASSESSMENT YEAR REFERRED TO IN CLAUSE (B) OF SUB-SECTION (1) OF SECTION 153B, EXCEPT WITH THE PRIOR APPROVAL OF THE JOINT COMMISSIONER. PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY WHERE THE ASSESSMENT OR REASSESSMENT ORDER, AS THE CASE MAYBE, IS REQUIRED TO BE PASSED BY THE ASSESSING OFFICER WITH THE PRIOR APPROVAL OF THE COMMISSIONER UNDER SUB-SECTION (12) OF SECTION 144BA.' 14.6 THE LEGISLATIVE INTENT CAN ALSO BE GATHERED FROM THE CBDT CIRCULAR NO. 3 OF 2008, DATED 12.3.2008 WHICH READ AS UNDER: '50. ASSESSMENT OF SEARCH CASES ORDERS OF ASSESSMENT AND REASSESSMENT TO BE APPROVED BY THE JOINT COMMISSIONER. 50.1 THE EXISTING PROVISIONS OF MAKING ASSESSMENT AND REASSESSMENT IN CASES WHERE SEARCH HAS BEEN CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A. DOES NOT PROVIDE FOR ANY APPROVAL FOR SUCH ASSESSMENT. 50.2 A NEW SECTION 153D HAS BEEN INSERTED TO PROVIDE THAT NO ORDER OF ASSESSMENT OR REASSESSMENT SHALL BE PASSED BY AN ASSESSING OFFICER BELOW THE RANK OF JOINT COMMISSIONER EXCEPT WITH THE PREVIOUS APPROVAL OF THE JOINT COMMISSIONER. SUCH PROVISION HAS BEEN MA DE APPLICABLE TO ORDERS OF ASSESSMENT OR REASSESSMENT PASSED UNDER CLAUSE (B) OF SECTION 153A IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A. THE PROVISION HAS ALSO BEEN MADE APPLICABLE TO ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 11 ORDERS OF ASSESSMENT PASSED UNDER CLAUSE (B) OF SECTION 153B IN RESPECT OF THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEAR CH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A. 50.3 APPLICABILITY-THESE AMENDMENTS WILL TAKE EFFECT FROM THE 1ST DAY OF JUNE, 2007.' 14.7 THE LEGISLATIVE INTENT IS CLEAR INASMUCH AS PRIOR TO THE INSERTION OF SEC.153D, THERE WAS NO PROVISION FOR TAKING APPROVAL IN CASES OF ASSESSMENT AND REASSESSMENT IN CASES WHERE SEARCH HAS BEEN CONDUCTED. THUS, THE LEGISLATURE WANTED THE ASSESSMENTS/REASSESSMENTS OF SEARCH AND SEIZURE CASES SHOULD BE MADE WITH THE PRIOR APPROVAL OF SUPERIOR AUTHORITIES WHICH ALSO MEANS THAT THE SUPERIOR AUTHORITIES SHOULD APPLY THEIR MINDS ON THE MATERIALS ON THE BASIS OF WHICH THE OFFICER IS MAKING THE ASSESSMENT AND AFTER DUE APPLICATION OF MIND AND ON THE BASIS OF SEIZED MATERIALS, THE SUPERIOR AUTHORITIES HAVE TO APPROVE THE ASSESSMENT ORDER. 14.8 THE QUESTION BEFORE US IS 'HAS THIS BEEN DONE IN THE PRESENT CASE'. THE ANSWER STANDS IN NEGATIVE FOR THE REASONS THAT THERE WAS NO APPLICATION OF MIND OF THE JOINT COMMISSIONER AS EVIDENT FROM THE DISCUSSION AFORESAID. IN OTHER WORDS, THE APPLICATION OF MIND OF THE JOINT COMMISSIONER WAS NECESSARY IN ORDER TO ACHIEVE THE LEGISLATURE INTENT. 14.9 HON'BLE SUPREME COURT IN THE CASE OF SAHARA INDIA (FIRM) V. CIT [2008] 169 TAXMAN 328/300 ITR 403 IN THE PROVISIONS OF SECTION 142(2A) WHERE THE AO AFTER HAVING REGARD TO THE NATURE AND COMPLEXITY/ VOLUME OF THE ACCOUNTS ETC. WAS OF THE OPINION THAT IT IS NECESSARY SO TO DO, HE MAY, WITH THE PREVIOUS APPROVAL OF THE CHIEF COMMISSIONER OR CHIEF COMMISSIONER OR COMMISSIONER, DIRECT THE ASSESSEE TO GET THE ACCOUNTS AUDITED BY AN ACCOUNTANT. THE HON'BLE SUPREME COURT OBSERVED AS UNDER: NEEDLESS TO EMPHASISE THAT BEFORE GRANTING APPROVAL, THE CHIEF COMMISSIONER OR THE COMMISSIONER, AS THE CASE MAY BE, MUST HAVE BEFORE HIM THE MATERIAL ON THE BASIS WHEREOF AN OPINION IN THIS BEHALF HAS BEEN FORMED BY THE ASSESSING OFFICER. THE APPROVAL MUST REFLECT THE APPLICATION OF MIND TO THE FACTS OF THE CASE. ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 12 14.10 LIKEWISE, THE HON'BLE HIGH COURT OF CALCUTTA IN THE CASE OF PEERLESS GENERAL FINANCE & INVESTMENT CO. LTD. V. DY. CIT [1999] 236 ITR 671 HAS MADE THE FOLLOWING OBSERVATIONS WHICH ARE PERTINENT TO THE FACTS OF THE CASE IN HAND BEFORE US. 'AN ARGUMENT HAS BEEN ADVANCED TO THE EFFECT THAT BY MAKING SUCH A NOMINATION, APPROVAL WILL BE DEEMED TO HAVE BEEN GRANTED. THE ANSWER TO THE SAID CONTENTION MUST BE RENDERED IN THE NEGATIVE. THE CHIEF COMMISSIONER OF INCOME TAX BEFORE GRANTING SUCH APPROVAL MUST HAVE BEFORE HIM THE MATERIALS ON THE BASIS WHEREOF AN OPINION HAD BEEN FORMED. A PRIOR APPROVAL CAN BE GRANTED ONLY WHEN THE MATERIALS FOR APPOINTMENT OF THE EXTRAORDINARY PROCEDURE IS REQUIRED TO BE TAKEN BY THE ASSESSING OFFICER. THE ASSESSING OFFICER, THEREFORE, WAS REQUIRED TO PLACE ALL MATERIALS BEFORE THE COMMISSIONER OF INCOME-TAX OR THE CHIEF COMMISSIONER OF INCOME TAX, AS THE CASE MAY BE, TO SHOW THAT HE INTENDS TO TAKE RECOURSE TO THE SAID PROVISION HAVING REGARD TO THE NATURE AND COMPLEXITY OF THE ACCOUNTS OF THE ASSESSEE AND THE INTERESTS OF THE REVENUE. NO SUCH MATERIALS HAD BEEN PLACED BEFORE THE CHIEF COMMISSIONER OF INCOME TAX. 14.11 ANOTHER SECTION RELEVANT TO THE FACTS IN ISSUE IS SEC. 158BG WHICH READ AS UNDER: 'THE ORDER OF ASSESSMENT FOR THE BLOCK PERIOD SHALL BE PASSED BY AN ASSESSING OFFICER NOT BELOW THE RANK OF AN ASSISTANT COMMISSIONER OR DEPUTY COMMISSIONER OR AN ASSISTANT DIRECTOR OR DEPUTY DIRECTOR, AS THE CASE MAY BE: PROVIDED THAT NO SUCH ORDER SHALL BE PASSED WITHOUT THE PREVIOUS APPROVAL OF-- (A ) THE COMMISSIONER OR THE DIRECTOR, AS THE CASE MAY BE, IN RESPECT OF SEARCH INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED UNDER SECTION 132A, AFTER THE 30TH DAY OF JUNE, 1995, BUT BEFORE THE 1ST DAY OF JANUARY, 1997; (B) THE JOINT COMMISSIONER OR THE JOINT DIRECTOR, AS THE CASE MAY BE, IN RESPECT OF SEARCH INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ANY ASSETS REQUISITIONED UNDER SECTION 132A, ON OR AFTER THE 1ST DAY OF JANUARY, 1997.' 14.12 IN THIS SECTION ALSO IT IS PROVIDED THAT THE ORDER CANNOT BE PASSED WITHOUT THE PREVIOUS APPROVAL. THIS SECTION WAS THOROUGHLY SCRUTINIZED BY THE TRIBUNAL MADRAS BENCH IN THE CASE OF KIRTILAL KALIDAS & CO. V. DY. CIT [1998] 67 ITD 573, AT PARA-41 OF ITS ORDER THE OBSERVATIONS OF THE TRIBUNAL ARE AS UNDER: 'IN THESE CASES, THE COMMISSIONER HAS PASSED AN ORDER GRANTING APPROVAL UNDER SECTION 158BG OF THE ACT THROUGH A SINGLE ORDER PASSED ON 31-3-1997 WITHOUT GIVING ANY REASON WHATSOEVER. AS WE HAVE RECORDED ELSEWHERE ABOVE, THE DRAFT ASSESSMENT ORDERS OF THE BLOCK PERIOD IN ALL THESE CASES WERE MADE ON 31-3-1997 AND ON THE VERY SAME DAY, I.E., ON 31-3-1997 THE COMMISSIONER GRANTS APPROVAL AND THAT TOO WITHOUT GIVING OR RECORDING ANY REASONS WHATSOEVER. THE APPROVAL ORDER DOES NOT DISCLOSE THE POINTS WHICH WERE CONSIDERED BY THE COMMISSIONER AND THE REASONS FOR ACCEPTING THEM. IN OUR VIEW, THIS IS TOTALLY AN UNSATISFACTORY METHOD OF GRANTING APPROVAL IN EXERCISE OF JUDICIAL POWER VESTED IN THE COMMISSIONER.' 14.13 THIS DECISION OF THE TRIBUNAL WAS CONSIDERED BY ALLAHABAD BENCH OF THE TRIBUNAL IN THE CASE OF VERMA ROADWAYS V. ASSTT. CIT [2000] 75 ITD 183 WHEREIN ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 13 ALSO THE ASSESSEE-APPELLANT HAS CHALLENGED THE VALIDITY OF APPROVAL TO THE ASSESSMENT ORDER ACCORDED BY THE CIT KANPUR. THE TRIBUNAL AT PARA-47 HAS HELD AS UNDER: 'COMING TO THE ASPECT OF THE APPLICATION OF MIND, WHILE GRANTING APPROVAL, WE ARE OF THE VIEW THAT REQUIREMENT OF APPROVAL PRESUPPOSES A PROPER AND THOROUGH SCRUTINY AND APPLICATION OF MIND. IN THE CASE OF KIRTILAL KALIDAS & CO. (SUPRA), THE I.T.A.T MADRAS BENCH 'A' HAS OBSERVED THAT THE FUNCTION TO BE PERFORMED BY THE COMMISSIONER IN GRANTING PREVIOUS APPROVAL REQUIRES AN ENQUIRY AND JUDICIAL APPROACH ON THE ENTIRE FACTS, MATERIALS AND EVIDENCE. IT HAS BEEN FURTHER OBSERVED THAT IN LAW WHERE ANY ACT OR FUNCTION REQUIRES APPLICATION OF MIND AND JUDICIAL DISCRETION OR APPROACH BY ANY AUTHORITY, IT PARTAKES AND ASSUMES THE CHARACTER AND STATUS OF A JUDICIAL OR AT LEAST QUASI-JUDICIAL ACT, PARTICULARLY BECAUSE THEIR ACT, FUNCTION, IS LIKELY TO AFFECT THE RIGHTS OF AFFECTED PERSONS.' 14.14 COMING TO THE FACTS OF THE CASE IN HAND IN THE LIGHT OF THE ANALYTICAL DISCUSSION HEREINABOVE AND AS MENTIONED ELSEWHERE, WE FIND THAT THE ACIT HAS GRANTED APPROVAL UNDER SECTION 153D OF THE ACT IN A MECHANICAL MANNER AND WITHOUT THE APPLICATION OF MIND AND WITHOUT CONSIDERING THE MATERIALS ON RECORD. FURTHERMORE THE APPROVAL WAS GRANTED ON THE VERY SAME DAY. THE SAID POWER CANNOT BE EXERCISED CASUALLY AND IN A ROUTINE MANNER. WE ARE CONSTRAINED TO OBSERVE THAT IN THE PRESENT CASE, THERE HAS BEEN NO APPLICATION OF MIND BY THE JCIT COMMISSIONER BEFORE GRANTING THE APPROVAL. THEREFORE, WE HAVE NO HESITATION TO HOLD THAT THE ASSESSMENT ORDER MADE U/S. 143(3) OF THE ACT R.W. SEC. 153A OF THE ACT IS BAD IN LAW AND DESERVES TO BE ANNULLED. 14.15 NOW THE ISSUE ARISES WHETHER THE ASSESSMENT ORDER CAN BE CHALLENGED IN THE PENALTY PROCEEDINGS AND CONSEQUENTLY PENALTY ORDER CAN BE HELD AS INVALID. THIS QUESTION HAS BEEN ANSWERED BY THIS TRIBUNAL IN THE CASE OF M/S ATLANTA ELECTRICALS PVT. LTD. VS ACIT IN ITA NOS. 551 & 552/AHD/2012 VIDE ORDER DATED 26-09-2019 BY OBSERVING AS UNDER: 9.2 WE HOWEVER ALSO ADVERT TO ANOTHER PLEA RAISED ON BEHALF OF THE ASSESSEE WHILE ASSAILING IMPOSITION OF PENALTY. A PLEA HAS BEEN INTER ALIA RAISED ON BEHALF OF THE ASSESSEE TOWARDS NON-FULFILLMENT OF PRE- REQUISITES BEFORE INVOCATION OF PROVISIONS OF SECTION 153C OF THE ACT. IT IS THE CASE OF THE ASSESSEE THAT IN THE ABSENCE OF JURISDICTION UNDER S.153C OF THE ACT, THE QUANTUM PROCEEDINGS UNDER S.153C OF THE ACT ITSELF IS NON EST AND CONSEQUENTLY, PENALTY UNDER S.271(1)(C) OF THE ACT COULD NOT HAVE BEEN IMPOSED. ON APPRAISAL, WE FIND FORCE IN THE AFORESAID PLEA TOO. THE ERSTWHILE PROVISION OF SECTION 153C OF THE ACT PRIOR TO ITS AMENDMENT BY FINANCE ACT, 2015 W.E.F. 01.06.2015 PROVIDED THAT THE AO WAS REQUIRED TO BE SATISFIED THAT BOTH UNDISCLOSED ASSETS AS WELL AS DOCUMENTS SEIZED ETC. MUST 'BELONG TO' ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 14 A PERSON OTHER THAN THE PERSON IN WHOSE HANDS SEARCH WAS CONDUCTED AND PROCEEDINGS UNDER S.153A OF THE ACT WAS INITIATED. THE EXPRESSION 'BELONG TO' WAS EXPLAINED BY THE HON'BLE DELHI HIGH COURT IN THE CASE OF PEPSICO INDIA HOLDINGS PRIVATE LIMITED VS. ACIT [2015] 370 ITR 295 (DELHI). IT WAS OBSERVED BY THE HON'BLE DELHI HIGH COURT THAT SECTION 153C OF THE ACT CANNOT BE INVOKED UNLESS THE AO OF THE SEARCHED PERSON IS SATISFIED FOR COGENT REASONS THAT SEIZED DOCUMENTS DO NOT 'BELONG TO' THE SEARCHED PERSON. THE DISTINCTION BETWEEN EXPRESSION 'BELONGS TO' AND 'RELATES TO' OR 'REFERS TO' MUST BE BORNE IN MIND BY AO. IT WAS OBSERVED BY THE HON'BLE COURT THAT AO SHOULD NOT CONFUSE THE EXPRESSION 'BELONGS TO' WITH EXPRESSION 'RELATES TO' OR 'REFERS TO'. THE HON'BLE COURT WENT ON TO EXPLAIN THE PURPORT OF THE EXPRESSION BY GIVING ILLUSTRATION OF A REGISTERED SALE DEED WHICH ESSENTIALLY IMPLIED SOMETHING MORE THAN A CASUAL CONNECTION. IN THE WAKE OF THE AFORESAID JUDGMENT, MERELY BECAUSE A DOCUMENT/LOOSE PAPER WAS FOUND IN THE POSSESSION OF A SEARCHED PERSON SHOWING REFERENCE TO CERTAIN ENTRIES RELATABLE TO A THIRD PERSON, THE SAID DOCUMENTS/LOOSE PAPER BY ITSELF WOULD NOT TANTAMOUNT TO BE BELONGING TO THE THIRD PERSON. SIMILAR VIEW HAS BEEN EXPRESSED IN THE CASE OF RENU CONSTRUCTIONS PVT. LTD. (DELHI) 399 ITR 262 (DEL.) AND KAMLESHBHAI DHARAMSHIBHAI PATEL 263 CTR 362 (GUJ). THE CO-ORDINATE BENCH TRIBUNAL IN SHAILESH S PATEL VS. ITO (2018) 97 TAXMANN.COM 570 (AHMEDABAD TRIB.) HAS ALSO REITERATED THE AFORESAID PRE-REQUISITE FOR FORMATION OF 'SATISFACTION' FOR THE PURPOSES OF SECTION 153C OF THE ACT. NO AVERMENT IS FOUND FROM THE CASE RECORDS THAT THE DOCUMENTS SEIZED TOWARDS EXCESS STOCK DID BELONG TO AND WAS THE PROPERTY OF THE COMPANY AND NOT OF THE DIRECTOR FROM WHOSE CUSTODY IT WAS FOUND. THEREFORE, IN SUCH NON-DESCRIPT AND INNOCUOUS SITUATION, WHERE THE QUANTUM ASSESSMENT ITSELF IS SUSCEPTIBLE, THE CONSEQUENCES IN FORM OF PENALTY UNDER S.271(1)(C) OF THE ACT WOULD NOT, IN OUR VIEW, BE JUSTIFIED. 14.16 IN VIEW OF THE ABOVE WE HOLD THAT THE PENALTY LEVIED BY THE AO IN THE PENALTY ORDER FRAMED UNDER SECTION 271(1)(C) OF THE ACT IS NOT SUSTAINABLE. AS SUCH THE ASSESSEE SUCCEEDS ON THE TECHNICAL ISSUE RAISED BY IT. ACCORDINGLY, WE REFRAIN FROM ADJUDICATING THE ISSUE RAISED BY THE ASSESSEE ON MERIT. IN OTHER WORDS, NO SEPARATE ADJUDICATION ON THE ISSUE RAISED BY THE ASSESSEE ON MERIT IS REQUIRED IN THE GIVEN FACTS AND CIRCUMSTANCES. ACCORDINGLY WE DISMISS THE SAME AS INFRUCTUOUS. HENCE, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 15. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 16. NOW COMING TO THE ITA NO. 388/RJT/2018 FOR A.YS 2008-09 IN THE CASE OF M/S REVA INFRASTRUCTURE INCORPORATION, RAJKOT. 17. AT THE OUTSET WE NOTE THAT SIMILAR GROUND WAS RAISED BY THE ASSESSEE IN THE CASE OF M/S UNITED ENGINEERS BEARING ITA NO. 305/RJT/2018 CORRESPONDING TO A.Y. 2012-13 WHICH HAS BEEN DECIDED PARTLY IN FAVOUR OF ASSESSEE VIDE PARAGRAPH NO. ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 15 13-14 OF THIS ORDER. FOR THE DETAILED DISCUSSION, PLEASE REFER THE ABOVE MENTIONED PARAGRAPH NUMBER OF THIS ORDER. ACCORDINGLY, WE HOLD THAT FINDING GIVEN IN ABOVE PARAGRAPHS WITH RESPECT TO ITA NO.305/RJT/2018 WILL MUTATIS MUTANDIS APPLY HERE IN THIS CASE ALSO. 18. IN THE RESULT, THE ABOVE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 19. NOW COMING TO THE ITA NOS. 389/RJT/2018 FOR A.Y. 2009-10 AND ITA NOS. 150-151/RJT/2019 FOR A.YS 2010-11 & 2011-12 IN THE CASE OF M/S REVA INFRASTRUCTURE INCORPORATION, RAJKOT. 20. AT THE OUTSET WE NOTE THAT SIMILAR GROUND WAS RAISED BY THE ASSESSEE IN THE CASE OF M/S UNITED ENGINEERS BEARING ITA NO. 305/RJT/2018 CORRESPONDING TO A.Y. 2012-13 WHICH HAS BEEN DECIDED PARTLY IN FAVOUR OF ASSESSEE VIDE PARAGRAPH NO. 14 OF THIS ORDER. FOR THE DETAILED DISCUSSION PLEASE REFER THE ABOVE MENTIONED PARAGRAPH NUMBER OF THIS ORDER. ACCORDINGLY, WE HOLD THAT FINDING GIVEN IN ABOVE PARAGRAPHS WITH RESPECT TO ITA NO.305/RJT/2018 WILL MUTATIS MUTANDIS APPLY HERE IN THIS CASE ALSO. 21. IN THE RESULT, THE ABOVE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. 22. NOW COMING TO THE ITA NO. 412/RJT/2017 FOR A.Y. 2008-09 IN THE CASE OF M/S SAJAVAT SALES AGENCY, RAJKOT. 23. AT THE OUTSET WE NOTE THAT SIMILAR GROUND WAS RAISED BY THE ASSESSEE IN THE CASE OF SHRI M/S UNITED ENGINEERS BEARING ITA NO.305/RJT/2018 CORRESPONDING TO A.Y. 2012-13 WHICH HAS BEEN DECIDED PARTLY IN FAVOUR OF ASSESSEE VIDE PARAGRAPH NO. 13 OF THIS ORDER. FOR THE DETAILED DISCUSSION PLEASE REFER THE ABOVE MENTIONED PARAGRAPH NUMBER OF THIS ORDER. ACCORDINGLY, WE HOLD THAT FINDING GIVEN IN ABOVE ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 16 PARAGRAPHS WITH RESPECT TO ITA NO. 305/RJT/2018 WILL MUTATIS MUTANDIS APPLY HERE IN THIS CASE ALSO. 24. IN THE RESULT, THE ABOVE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. 25. NOW COMING TO THE ITA NOS.312 TO 318/RJT/2018 FOR A.YS (2009-10 TO 2015- 16) IN THE CASE OF M/S.SAJAVAT SALES AGENCY, RAJKOT. 26. AT THE OUTSET WE NOTE THAT SIMILAR GROUND WAS RAISED BY THE ASSESSEE IN THE CASE OF SHRI M/S UNITED ENGINEERS BEARING ITA NO.305/RJT/2018 CORRESPONDING TO A.Y. 2012-13 WHICH HAS BEEN DECIDED PARTLY IN FAVOUR OF ASSESSEE VIDE PARAGRAPH NOS. 13 & 14 OF THIS ORDER. FOR THE DETAILED DISCUSSION PLEASE REFER THE ABOVE MENTIONED PARAGRAPH NUMBER OF THIS ORDER. ACCORDINGLY, WE HOLD THAT FINDING GIVEN IN ABOVE PARAGRAPHS WITH RESPECT TO ITA NO. 305/RJT/2018 WILL MUTATIS MUTANDIS APPLY HERE IN THIS CASE ALSO. 27. IN THE RESULT, THE ABOVE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. 28. NOW COMING TO THE ITA NOS.302-304/RJT/2018 FOR A.YS 2009-10, 2014-15 & 2015-16 IN THE CASE OF SHRI DHARMESH K. KHOONT, RAJKOT. 29. AT THE OUTSET WE NOTE THAT SIMILAR GROUND WAS RAISED BY THE ASSESSEE IN THE CASE OF SHRI M/S UNITED ENGINEERS BEARING ITA NO.305/RJT/2018 CORRESPONDING TO A.Y. 2012-13 WHICH HAS BEEN DECIDED PARTLY IN FAVOUR OF ASSESSEE VIDE PARAGRAPH NO. 14 OF THIS ORDER. FOR THE DETAILED DISCUSSION PLEASE REFER THE ABOVE MENTIONED PARAGRAPH NUMBER OF THIS ORDER. ACCORDINGLY, WE HOLD THAT FINDING GIVEN IN ABOVE PARAGRAPHS WITH RESPECT TO ITA NO.305/RJT/2018 WILL MUTATIS MUTANDIS APPLY HERE IN THIS CASE ALSO. 30. IN THE RESULT, THE ABOVE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ITA NO.305/RJT/2018 WITH 18 OTHERS A.Y. 2012-13 & OTHERS 17 31. NOW COMING TO THE ITA NOS.319 TO 321/RJT/2018 FOR A.YS 2011-12, 2014-15 & 2015-16 IN THE CASE OF SHRI BHAVESH KIRITBHAI KHOONT, RAJKOT. 32. AT THE OUTSET WE NOTE THAT SIMILAR GROUND WAS RAISED BY THE ASSESSEE IN THE CASE OF SHRI M/S UNITED ENGINEERS BEARING ITA NO.305/RJT/2018 CORRESPONDING TO A.Y. 2012-13 WHICH HAS BEEN DECIDED PARTLY IN FAVOUR OF ASSESSEE VIDE PARAGRAPH NOS. 14 OF THIS ORDER. FOR THE DETAILED DISCUSSION PLEASE REFER THE ABOVE MENTIONED PARAGRAPH NUMBER OF THIS ORDER. ACCORDINGLY, WE HOLD THAT FINDING GIVEN IN ABOVE PARAGRAPHS WITH RESPECT TO ITA NO. 305/RJT/2018 WILL MUTATIS MUTANDIS APPLY HERE IN THIS CASE ALSO. 33. IN THE RESULT, THE ABOVE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. 34. IN THE COMBINED RESULTS, ALL THE APPEALS FILED BY THE DIFFERENT ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 08/07/2021 AT AHMEDABAD. SD/- SD/- ( MAHAVIR PRASAD ) JUDICIAL MEMBER ( WASEEM AHMED ) ACCOUNTANT MEMBER (TRUE COPY) (TRUE COPY) AHMEDABAD; DATED 08/07/2021 MANISH