M/s. J.R. Modi Finance (P) Ltd., New Delhi V. ACIT, New Delhi

ITA 5116/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7564 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-03-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 06-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SULEKHA VERMA
• Keywords: Business expenditure; Search and seizure; Document seized; Documents seized
• Section: 153A; 132; 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D, NEW DELHI BEFORE SHRI C. M. GARG, JUDICIAL MEMBER AND SHRI L. P. SAHU, ACCOUNTANT MEMBER I.T.A. NO.5116/DEL/2013 (ASSESSMENT YEAR 2004-05) J R MODI FINANCE (P) LTD., VS. ACIT, CC-21, C/O SEKHRI & ASSOCIATES, CA NEW DELHI FLAT NO.104-105, 28. FEROZ GANDHI ROAD, LAJPAT NAGAR III, NEW DELHI GIR / PAN :AAACK2950M (APPELLANT) (RESPONDENT) APPELLANT BY :SHRI R. S. SINGHVI, CA RESPONDENT BY :SMT. SULEKHA VERMA, CIT DR DATE OF HEARING: 17/03/2016 DATE OF PRONOUNCEMENT: 06/06/2016 ORDER PER L. P. SAHU, AM: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF LD. CIT(A) II, NEW DELHI DATED 17.07.2013 FOR TH E ASSESSMENT YEAR 2004-05. THE CASE IS RELATED WITH SECTION 153C/143(3) OF THE I.T. ACT, 1961. THE ASS ESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. (I) THAT UNDER THE FACTS AND CIRCUMSTANCES OF T HE CASE, THE LOWER AUTHORITIES WERE NOT JUSTIFIED TO R EJECT THE CLAIM OF THE APPELLANT THAT THE ASSESSMENT FRAM ED U/S 153C OF THE INCOME TAX ACT IN THIS CASE WAS BEYOND JURISDICTION AND BARRED BY LIMITATION OF TIM E. 2 I.T.A.NO.5116./DEL/2013 (II) THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED TO REJECT THE CLAIM IGNORING THE JUDGEMENT OF ITAT, NE W DELHI AS WELL AS THE JUDGEMENT OF HON'BLE DELHI HIG H COURT ON THE SAME ISSUE. 2. (I) THAT UNDER THE FACTS AND CIRCUMSTANCES OF TH E CASE, THE AUTHORITIES BELOW WERE NOT JUSTIFIED TO M AKE LUMP SUM DISALLOWANCE OF RS.5,00,000/- OUT OF BUSINESS EXPENSES INCURRED BY THE APPELLANT WHICH WERE DULY SUPPORTED WITH AUDITED ACCOUNTS. (II) THAT EVEN OTHERWISE SUCH DISALLOWANCE IS NOT CALLED FOR UNDER SECTION 153A OF THE INCOME TAX ACT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL. THAT THE ASSESSEE CRAVES THE RIGHT TO ADD, AMEND, DELETE OR SUBSTITUTE ANY GROUND OF APPEAL 4. THAT THE ORDER FRAMED IS AGAINST THE FACTS OF TH E CASE AND BAD IN LAW. 1.1 THE 1 ST GROUND OF APPEAL IS PURELY LEGAL GROUND AND THE ASSESSEE CHALLENGED THE ACTION OF ASSESSING OFF ICER WHO PASSED ORDER U/S 153C/143(3) OF THE I.T. ACT, 1 961. THE 2 ND GROUND OF APPEAL IS ALSO ON LEGAL ISSUE AS WELL AS ON MERITS ALSO. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME ON 10.08.2004 U/S 139(1) DECLA RING AN INCOME OF RS.3,51,430/-. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U/S 132 OF THE ACT ON 19.06.2009 AT LALIT MODI GROUP. DURING THE COURSE OF SEARCH AT THE RESIDENCE CUM BUSINESS PREMISES AT D- 20, NDSE-II, NEW DELHI, CERTAIN DOCUMENTS BELONGING TO THE ASSESSEE WERE SEIZED. ON THE BASIS OF SEIZED DOCUM ENTS, 3 I.T.A.NO.5116./DEL/2013 PROCEEDINGS WERE INITIATED IN THE CASE OF ASSESSEE U/S 153C READ WITH SECTIN153A OF THE ACT. THE C SE WAS CENTRALIZED BY CIT-II, NEW DELHI VIDE ORDER DATED 11.07.2011 AND STATUTORY NOTICES WERE ISSUED ON 18.07.2011. IN RESPONSE TO THE NOTICES, THE APPELL ANT FILED WRITTEN SUBMISSIONS / OBJECTIONS ON 06.09.2011, PLA CED AT PAGES 10-14 OF THE PAPER BOOK BEFORE ACIT, CC21, N EW DELHI. IN RESPONSE TO THE WRITTEN SUBMISSIONS / OBJECTIONS OF THE ASSESSEE, ASSESSING OFFICER DISPO SED OF IT ON 23.09.2011, THE CONTENTS OF WHICH ARE REPRODUCED BELOW: OFFICE OF THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-21, NEW DELHI ROOM NO.344, 3RD FLOOR, E-2, ARA CENTRE, JHANDEWALAN EXTENTION, NEW DELHI F.NO. ACIT/CC-21/2011-121 DATED:23.09.2011 TO THE PRINCIPAL OFFICER, M/S J.R. MODI FINANCE PVT. LTD., 22-SIRI FORT ROAD, NEW DELHI. SIR, SUBJECT:- PROCEEDINGS U/S 153C OF THE IT ACT, 1961 FOR ASSESSMENT YEAR 2004-05 TO 2009-10 IN YOUR CASE - REGARDING - ******** KINDLY REFER TO YOUR LETTER DATED 06.9.2011 ON THE ABOVE SUBJECT. VIDE THIS LETTER, YOU HAVE RAISE D THE FOLLOWING OBJECTIONS IN REGARD TO INITIATION OF 4 I.T.A.NO.5116./DEL/2013 ASSESSMENT PROCEEDINGS U/S 153C OF THE IT ACT, 1961:- I) THAT THE ASSESSMENT PROCEEDINGS U/S 153C IS BEYOND TIME LIMIT LAID DOWN IN SECTION 153A OF THE IT ACT. THAT THE SEARCH OPERATION IN THE CASE OF SHRI LALIT MODI WAS CARRIED ON 19.06.2009 DURING WHICH CERTAIN DOCUMENTS OF THE ASSESSEE COMPANY WERE SEIZED ON THE BASIS ON WHICH PROCEEDINGS U/S 153C HAVE BEEN INITIATED. THAT ON THE BASIS OF SATISFACTION NOTE RECORDED ON 18.07.2011, THE ASSESSMENT U/S 153C COULD BE UNDERTAKEN UP TO 6 FINANCIAL YEARS PRIOR T O SUCH DATE AND THESE SIX YEARS BECOME FY 2005-06 TO FY 2010-11 I.E. AY 2006-07 TO 2011-12. IN VIEW OF ABOVE POSITION, ASSESSMENT UNDER REFERENCE I.E. AY 2004-05 AND 2005-06 IS OUTSIDE THE SCOPE OF PROVISIONS OF SEC. 153C. THE LEGAL POSITION TO THIS EFFECT IS SELF EVIDENT FROM PROVISIONS OF SECTION 1 53C AND ALSO SUPPORTED BY LEGAL DECIDED CASES. SINCE PROCEEDINGS U/S 153C OF IT ACT IN THIS CASE ARE BEYOND THE STATUTORY TIME LIMIT OF THEIR INITIATION THE SAME MAY KINDLY BE DROPPED. II) THAT THE ASSESSMENT PROCEEDINGS U/S 153C ARE SEARCH RELATED PROCEEDINGS AND SHALL BE RESTRICTED TO COVER THE CONCEALED OR UNDISCLOSED INCOME BASED ON THE BASIS OF INCRIMINATING SEIZED DOCUMENTS FOUND A S RESULT OF SEARCH. IT IS NOT A CASE OF REGULAR ASSES SMENT OR REASSESSMENT AND AS SUCH THE PROVISIONS OF SECTI ON 153A OF THE IT ACT WHICH ARE PARALLEL TO PROVISION U/S 153C OF IT ACT ARE TO BE CONSIDERED IN THE CONTEXT OF PURPOSE, OBJECT AND SCHEME OF IT ACT. THIS LEGAL PROPOSITION IS ALSO HELD IN VARIOUS DECIDED CASES O N THE SUBJECT. THE ASSESSMENT IN THIS CASE MAY KINDLY BE MADE KEEPING IN VIEW THESE PROVISIONS. III) THAT AS PER PROVISIONS OF SECTION 153A OF THE IT ACT WHICH ARE PARALLEL TO PROVISIONS OF SECTION 153 C, ONLY PENDING ASSESSMENT AT THE TIME OF SEARCH SHALL ABATE. THIS LEGAL PROPOSITION HAS BEEN UPHELD IN NUMEROUS DECIDED CASES. SINCE THE ASSESSMENT YEAR 5 I.T.A.NO.5116./DEL/2013 UNDER QUESTION WAS NOT PENDING ON THE DATE OF RECORDING OF SATISFACTION ON 1807.2011, THE ASSESSMENT PROCEEDINGS IN THIS CASE SHALL NOT ABATE IN PROCEEDINGS U/S 153A READ WITH SECTION 153C OF THE IT ACT. THE ASSESSMENT IN THIS CASE MAY KINDLY BE MADE KEEPING IN VIEW THESE PROVISIONS. YOUR ABOVE OBJECTIONS HAVE BEEN CONSIDERED BUT HAVE NOT BEEN FOUND TO BE SATISFACTORY AND ACCEPTABLE FO R THE REASONS GIVEN HEREUNDER:- FROM THE OBJECTIONS RAISED ABOVE AT 1 (I), 1 (II) AND 1 (III) BY THE ASSESSEE COMPANY, IT IS NOTED TH AT IN THESE OBJECTIONS THE ASSESSEE COMPANY HAS RAISED ISSUE THAT PROCEEDINGS U/S 153C INITIATED IN ITS CA SE ARE NOT BASED ON SEIZED MATERIAL BELONGING TO THE ASSESSEE COMPANY THAT SATISFACTION NOT BASED ON ANY INCRIMINATING MATERIAL IS BAD IN LAW AS ALSO THE FA CT THAT INITIATION OF PROCEEDINGS U/S 153C SHOULD BE I N RESPECT OF SUCH YEARS IN WHICH THERE IS SOME MATERI AL. IT IS SEEN FROM THE PLAIN AND LITERAL INTERPRETATIO N OF THE PROVISION OF SECTION 153C THAT ONCE A DOCUMENT IS FOUND TO BELONGING TO A PERSON OTHER THAN THE PERSO N REFERRED TO IN SECTION 153A THE PROVISIONS OF SECTI ON 153C ARE IPSO FACTO ATTRACTED AND IT IS AUTOMATIC T HAT THE ASSESSMENTS COVERED UNDER ALL THE YEARS FALLING WITHIN THE MANDATE OF PROVISO OF SECTION 153C(1) AN D READ WITH SECTION 153A(1) GET ATTRACTED MOREOVER TH ERE IS NO LEGAL REQUIREMENT THAT INITIATION OF PROCEEDI NGS SHOULD ONLY BE WITH RESPECT TO SUCH YEARS IN RESPEC T OF WHICH THERE IS SOME MATERIAL. THE REQUIREMENT OF TH E SECTION 153C WITH REFERENCE TO SATISFACTION SEEMS T O BE ONLY THE PRIMA FACIE SATISFACTION AND NOT A CONCLUSIVE SATISFACTION. THUS THE AO MUST BE PRIMA FACIE SATISFIED THAT THE DOCUMENTS ETC. BELONG TO T HE OTHER PERSONS THAN THE PERSON SEARCHED. NOW COMING TO THE ISSUE OF LIMITATION RAISED BY THE ASSESSEE COMPANY, ARGUING THAT ON THE BASIS OF SATISFACTION NOTE RECORDED ON 23.08.2011 THE 6 I.T.A.NO.5116./DEL/2013 ASSESSMENT U/S 153C COULD BE UNDERTAKEN UPTO SIX FINANCIAL YEARS PRIOR TO SUCH DATE AND THESE SIX YE ARS BECOME FY 2005-06 TO FY 2010-11 I.E. AY 2006-07 TO 2011-12. THIS PLEA HOWEVER IS FUNDAMENTALLY FLAWED IN VIEW OF THE BASIC FACT THAT THE AO WHO WAS TO HA ND OVER THE SEIZED MATERIAL IS ALSO THE AO OF THIS CAS E WHO WAS TO TAKE OVER THE SEIZED MATERIAL. THEREFORE , THE ISSUE OF HANDING OVER AND TAKING OVER OF SEIZED MATERIAL IS OBVIATED. THE PLEA TAKEN REGARDING THE DATE OF SEARCH AND SUBSEQUENT DATE OF HANDING OVER OF SEIZED MATERIAL IS ALSO OBVIATED AS BOTH THE SID ES ARE MANNED BY THE SAME AO. THE NUMBER OF ASSESSMENT YEARS COVERED U/S 153C ARE THE SAME AS PER THE PROVISIONS OF SECTION 153A ONLY. IN VIEW OF THE ABOVE STATED FACTS IT IS CLEAR THAT THE NOTICES U/S 153C READ WITH SECTION 153A OF THE IT A CT HAVE RIGHTLY BEEN ISSUED AFTER RECEIPT OF SEIZED MATERIAL OF OTHER PERSON I.E. ASSESSEE COMPANY IT M AY BE MENTIONED HERE AGAIN THAT THE UNDERSIGNED IS THE AO IN BOTH THE CASES IE THE OTHER PERSON I.E. THE ASSESSEE AS WELL AS THE PERSON SEARCHED I.E. SHRI L ALIT MODI AND SHRI SURENDER MODI. 53A(1) GET ATTRACTED. MOREOVER THERE IS NO LEGAL REQUIREMENT THAT INITIAT ION OF PROCEEDINGS SHOULD ONLY BE WITH RESPECT TO SUCH YEARS IN RESPECT OF WHICH THERE IS SOME MATERIAL. T HE REQUIREMENT OF THE SECTION 153C WITH REFERENCE TO SATISFACTION SEEMS TO BE ONLY THE PRIMA FACIE SATISFACTION AND NOT A CONCLUSIVE SATISFACTION. THU S THE AO MUST BE PRIMA FACIE SATISFIED THAT THE DOCUMENTS ETC. BELONG TO THE OTHER PERSONS THAN THE PERSON SEARCHED. FURTHER AS REGARD TO YOUR CONTENTION THAT ASSESSMEN T UNDER SECTION 153C CANNOT BE EQUATED TO REGULAR AND NORMAL ASSESSMENTS AND NEED TO BE BASED ON INCRIMINATING AND SEIZED DOCUMENTS, YOUR ATTENTION IS INVITED TO THE DECISION OF ITAT IN THE CASE OF SHYA M LATA KAUSHIK VS ACIT(2008) 4 DTR(DEL:G) ITAT G BENCH & SHIVNATH RAI HARNARAIN INDIA (P) LTD, VS DCIT(2009) 117 ITD 74 WHEREAS IT HAS BEEN HELD THAT 7 I.T.A.NO.5116./DEL/2013 THERE IS NO REQUIREMENT FOR AN ASSESSMENT MADE U/S 153A TO BE BASED ON ANY MATERIAL SEIZED IN THE COUR SE OF SEARCH. THERE IS NOTHING CONTAINED IN SECTION 15 3A WHICH DEPICTS THAT ADDITION U/S 153A CAN BE MADE ONLY ON THE BASIS OF DOCUMENTS/MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH. HENCE, IN VIEW OF THE FACTS STATED ABOVE, YOUR ABOV E SAID OBJECTION IS HEREBY REJECTED. 3. LD. A.R. ALSO RAISED THE QUESTION THAT NO SATISF ACTION HAS BEEN RECORDED BY THE ASSESSING OFFICER OF THE SEARCHED PERSON, ONLY ONE SATISFACTION NOTE HAS BEE N RECORDED FOR THE OTHER THAN SEARCHED PERSON WHICH H AS BEEN PLACED AT PAGES 8-9 OF THE PAPER BOOK. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE SUBMIS SIONS / OBJECTIONS SUBMITTED BY THE ASSESSEE. DURING THE C OURSE OF SEARCH, NO ANY INCRIMINATING MATERIAL WAS FOUND IN CASE OF OTHER THAN SEARCHED PERSON I.E. THE ASSESSE E. DURING THE ASSESSMENT PROCEEDINGS, NECESSARY DETAIL S WERE CALLED FROM THE ASSESSEE. ON THE BASIS OF SUBMISSIONS MADE BY THE ASSESSEE, ASSESSING OFFICER MADE ADDITION OF RS.5,00,000/- DISALLOWING SOME EXPENSES. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, ASSESSEE FILED APPEAL BEFORE THE 1 ST APPELLATE AUTHORITY WHO UPHELD THE ORDER OF THE ASSESSING OFFICER. FUR THER AGGRIEVED BY THE ORDER OF LD. CIT(A), HE FILED APPE AL BEFORE THE TRIBUNAL. 3.1 LD. A.R. FILED WRITTEN SUBMISSIONS BEFORE US WH ICH WAS EARLIER FILED BEFORE LD. CIT(A) ON 05.07.2013 AND 8 I.T.A.NO.5116./DEL/2013 06.09.2011 BEFORE LD. CIT(A) AND A.O. RESPECTIVELY. LD. A.R. VEHEMENTLY CONTENDED THAT ASSESSMENT PROCEEDIN GS DONE BY THE A.O. IS BEYOND THE PERIOD OF 6 YEARS PR IOR TO THE DATE OF RECORDING SATISFACTION U/S 153C OF THE I. T. ACT, 1961. ON 23.08.2011. HE REFERRED SECTION 153C OF T HE I.T. ACT WHICH IS AS UNDER: 153C. [(1)J NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWEL LERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCO UNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG 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 PROCE ED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A.]. .. 3.2 HE FURTHER SUBMITTED THAT THE SATISFACTION U/S1 53C IS TO BE RECORDED BY THE A.O. OF THE SEARCHED PERSO N AND THEN HE ALONG WITH SATISFACTION NOTE, SHOULD FORWAR D THE COPY OF SEIZED DOCUMENTS TO THE A.O. OF THE PERSON TO WHOM SUCH DOCUMENTS BELONG. AS PER THE PROVISIONS OF SECTION 153C, THE DATE OF SEARCH IS TO BE SUBSTITUT ED BY THE DATE OF RECEIVING THE BOOKS OF ACCOUNTS AND DOCUMENTS AND ASSETS SEIZED BY THE A.O. HAVING JURISDICTION OVER SUCH OTHER PERSON. HE RELIED UPO N THE FOLLOWING JUDGEMENTS: 9 I.T.A.NO.5116./DEL/2013 I) CIT VS AAKASH AROGYA MANDIR PVT. LTD. ITA 509/2015,(H.C.), WHEREIN HONBLE JURISDICTIONAL HIGH COURT HELD THAT EVEN IF THE A.O. WERE THE SAME, SATISFACTION WOULD HAVE TO BE RECORDED SEPARATELY Q UA THE SEARCHED PERSON AND THE ASSESSEE. II) R. L. ALLIED INDUSTRIES VS ITO ITA 567/DEL/2011 DATED 18.11.2014, WHEREIN ITAT HELD AS UNDER: 8. THUS, AS PER SECTION 153A(L)(B)' THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR REASSESS THE TOTA L INCOME OF THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE ASSESSMENT YEAR IN WHICH SEARCH IS CONDUCTED. THUS, IN OTHER WORDS, HE HAS TO ASSESS THE SEARCH YEAR AN D SIX PRECEDING YEARS. AS PER PROVISO TO SECTION 153C , FOR THE PURPOSE OF SECTION 153C, THE DATE OF RECEIV ING THE BOOKS OF ACCOUNT OR DOCUMENTS SHALL BE CONSIDERED THE DATE OF SEARCH. THEREFORE, WITH THE COMBINED READING OF PROVISO TO SECTION 153C AND SECTION 153A(I)(B), IT IS CLEAR THAT IN THE CASE OF THE PERSON IN WHOSE CASE ACTION IS REQUIRED UNDER SECTI ON 153C, THE ASSESSING OFFICER IS EMPOWERED TO TAKE ACTION UNDER SECTION 153C FOR THE YEAR IN WHICH THE SEIZED DOCUMENT IS RECEIVED BY HIM AND THE PRECEDIN G SIX YEARS. IN THE CASE UNDER APPEAL BEFORE US, AS MENTIONED BY THE ASSESSING OFFICER IN PARAGRAPH 2 O F HIS ORDER, THE SEIZED MATERIAL WAS RECEIVED ON 12TH MARCH, 2009 FROM ACIT, CENTRAL CIRCLE-17. THUS, THE YEAR IN WHICH SEIZED MATERIAL WAS SEIZED IS PREVIOU S YEAR 2008-09 RELEVANT TO AY 2009-10. THE PRECEDING SIX YEARS WOULD BE AY 2008-09, 2007-08, 2006-07, 200S-06, 2004-05 AND 2003-04. THEREFORE, AFTER CONSIDERING THE FACTS OF THE ASSESSEE'S CASE AND COMBINED READING OF SECTION 153C AS WELL AS SECTION 153A, IN OUR OPINION, THE ISSUE OF NOTICE UNDER SEC TION 153C FOR AY 2001-02 & 2002- 03 IS BARRED BY LIMITATION. ACCORDINGLY, WE QUASH THE SAME AND CONSEQUENTIALLY, THE ASSESSMENT ORDER PASSED IN 10 I.T.A.NO.5116./DEL/2013 PURSUANCE TO THE NOTICE ISSUED UNDER SECTION 153C I S ALSO QUASHED. II) CITVS RRJ SECURITIES LTD. IN I.T.A. 164/2015 (H .C.- DEL.) RELEVANT PORTION OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IS GIVEN AS UNDER: FIRST OF ALL, THE A.O. OF THE SEARCHED PERSON WOUL D HAVE TO ARRIVE AT A SATISFACTION THAT DOCUMENT OR A SSET SEIZED DOES NOT BELONG TO THE PERSON SEARCHED BUTS TO SOME OTHER PERSON AND SECONDLY, THE SEIZED DOCUMENTS/ASSETS ARE HANDED OVER TO THE A.O. HAVING JURISDICTION OVER THAT A PERSON, THAT IS, THE PERSO N OTHER THAN THE ONE SEARCHED AND TO WHOM THE SEIZED DOCUMENTS/ASSETS ARE SAID TO BELONGS. IT, PLAINLY, FOLLOWS THAT THE RECORDING OF A SATIS FACTION THAT THE ASSETS/DOCUMENTS SEIZED BELONG TO A PERSON OTHER THAN A PERSON SEARCHED IS NECESSARILY THE FIR ST STEP TOWARDS INITIATION OF PROCEEDINGS U/S 153C OF THE ACT. IN THE CASE WHERE THE A.O. OF THE SEARCHED PER SON AS WELL AS THE OTHER PERSON IS ONE AND THE SAME, TH E DATE ON WHICH SUCH SATISFACTION IS RECORDED WOULD B E THE DATE ON WHICH THE A.O. ASSUMES POSSESSION OF TH E SEIZED ASSETS/DOCUMENTS IN HIS CAPACITY AS AN A.O. OF THE PERSON OTHER THAN THE ONE SEARCHED. THE SECOND STAGE COMMENCES FROM THE RECORDING OF SUCH SATISFACTION BY THE ASSESSING OFFICER OF THE, SEARCHED PER. ON' FOLLOWED BY HANDING OVER OF ALL T HE REQUISITE DOCUMENTS ETC. TO THE ASSESSING OFFICER O F SUCH 'OTHER PERSON' THEREAFTER FOLLOWED BY ISSUANCE OF THE NOTICE OF THE PROCEEDINGS UNDER SECTION 153 REA D WITH SECTION 153A AGAINST SUCH 'OTHER PERSON'. THE INITIATION OR PROCEEDINGS AGAINST 'SUCH OTHER PERSO N' ARE DEPENDENT UPON A SATISFACTION BEING RECORDED. SUCH SATISFACTION MAY BE DURING THE SEARCH OR AT TH E TIME OF INITIATION OF ASSESSMENT PROCEEDINGS AGAINS T THE 'SEARCHED PERSON', OR EVEN DURING THE ASSESSMEN T PROCEEDINGS AGAINST HIM OR EVEN AFTER COMPLETION OF 11 I.T.A.NO.5116./DEL/2013 THE SAME, BUT BEFORE ISSUANCE OF NOTICE TO THE 'SUC H OTHER PERSON' UNDER SECTION 153. 26. EVEN IN A CASE, WHERE THE ASSESSING OFFICER OF BOTH THE PERSONS IS THE SAME AND ASSUMING THAT NO HANDING OVER OF DOCUMENTS IS REQUIRED, THE RECORDIN G OF 'SATISFACTION' IS A MUST, AS, THAT IS THE FOUNDA TION, UPON WHICH THE SUBSEQUENT PROCEEDINGS AGAINST THE 'OTHER PERSON' ARE INITIATED. THE HANDING OVER OF DOCUMENTS ETC. IN SUCH A CASE MAY OR MAY NOT BE OF MUCH RELEVANCE BUT THE RECORDING OF SATISFACTION IS STILL REQUIRED AND IN FACT IT IS MANDATORY.' 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 T HE 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 SECTIO N 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 FOL LOW 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 OVE R OF 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., S ' SEPTEMBER, 2010. IN THIS VIEW, THE ASSESSMENTS MADE IN RESPECT OF ASSESSMENT YEAR 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 A.O., OF THE SEARCHED PERSON. THUS, THE DATE ON WHICH THE AO OF THE PER ON OTHER THAN THE ONE SEARCHED ASSUMES THE POSSESSION OF THE SEIZED ASSETS WOULD BE THE RELEVANT DATE FOR APPLYI NG 12 I.T.A.NO.5116./DEL/2013 THE PROVISIONS OF SECTION 153A OF THE ACT. WE, THEREFORE, ACCEPT THE CONTENTION THAT IN ANY VIEW O F THE MATTER, ASSESSMENT FOR A Y 2003-04 AND A Y 2004-05 WERE OUTSIDE THE SCOPE OF SECTION ] 53C OF THE ACT AND THE AO HAD NO JURISDICTION TO MAKE AN ASSESSMENT OF THE ASSESSEE'S INCOME FOR THAT YEAR. 25. THE NEXT ASPECT TO BE CONSIDERED IS WHETHER TH E CONCLUDED ASSESSMENTS COULD BE REASSESSED ON THE BASIS OF THE SEIZED ASSETS/DOCUMENTS. HOWEVER, THE QUESTION THEN ARISES IS WHETHER THE A O OF THE ASSESSEE WAS JUSTIFIED IN TAKING FURTHER STE PS FOR REASSESSING THE INCOME OF THE ASSESSEE IN RESPE CT OF THE ASSESSMENT YEARS FOR WHICH THE ASSESSMENTS WERE CONCLUDED AND IN RESPECT OF WHICH THE SEIZED DOCUMENT HAD NO BEARING. IN OUR VIEW, THE SAME WOULD BE CLEARLY IMPERMISSIBLE AS THE SEIZED MATERI AL NOW AVAILABLE WITH THE AO, ADMITTEDLY, HAD NO NEXUS WITH THOSE ASSESSMENTS AND WAS WHOLLY IRRELEVANT FO R THE PURPOSE OF ASSESSING THE INCOME OR THE ASSESSEE FOR THE YEARS IN QUESTION. MERELY BECAUSE A VALUABL E ARTICLE OR DOCUMENT BELONGING TO AN ASSESSEE IS SEI ZED FROM THE POSSESSION OF A PERSON SEARCHED UNDER SECTION L32 OF THE ACT, DOES NOT MEAN THAT THE CONCLUDED ASSESSMENTS OF THE ASSESSEE ARE NECESSARILY TO BE RE-OPENED UNDER SECTION 153C OF T HE ACT. IN OUR VIEW, THE CONCLUDED ASSESSMENTS CANNOT BE INTERFERED WITH MECHANICALLY AND SOLELY FOR THE REASON THAT A DOCUMENT BELONGING TO THE ASSESSEE, WHICH HAS NO BEARING ON THE ASSESSMENTS OF THE ASSESSEE FOR THE YEARS PRECEDING THE SEARCH, WAS SEIZED FROM THE POSSESSION OF THE SEARCHED PERSONS. IF' THE SEIZED MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING SEIZED AS HANDED OVER TO THE AO OF THE ASSESSEE, ARE DULY DISCLOSED AND REFLECTE D IN THE RETURNS FILED BY THE ASSESSEE, NO FURTHER INTERFERENCE WOULD BE CALLED FOR. SIMILARLY, IF THE BOOKS OF ACCOUNTS/DOCUMENTS SEIZED DO NOT REFLECT ANY UNDISCLOSED INCOME, THE ASSESSMENTS ALREADY MADE CANNOT BE INTERFERED WITH. MERELY BECAUSE VALUABLE 13 I.T.A.NO.5116./DEL/2013 ARTICLES AND/OR DOCUMENTS BELONGING TO THE ASSESSEE HAVE BEEN SEIZED AND HANDED OVER TO THE AO OF THE ASSESSEE WOULD NOT NECESSARILY REQUIRE THE AO TO REOPEN THE CONCLUDED ASSESSMENTS AND REASSESS THE INCOME OF THE ASSESSEE. 36. THE DECISION IN SSP AVIATION (SUPRA) CANNOT BE UNDERSTOOD TO MEAN THAT THE AO HAS THE JURISDICTION TO MAKE A REASSEMENT IN EVERY CASE, WHERE SEIZED ASSETS OR DOCUMENTS ARE HANDED OVER TO THE AO. THE QUESTION WHETHER THE DOCUMENTS/ASSETS SEIZED COULD POSSIBLY REFLECT ANY UNDISCLOSED INCOME HAS TO BE CONSIDERED BY THE AO AFTER EXAMINING THE SEIZED ASSETS/DOCUMENTS HANDED OVER TO HIM. IT IS ONLY IN CASES WHERE THE SEIZED DOCUMENTS/ASSETS COULD POSSIBLY REFLECT ANY UNDISCLOSED INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS, THAT FURTHER ENQUIRY WOULD BE WARRANTED IN RESPECT OF THOSE YEARS. WHILST, IT IS NOT NECESSARY FOR THE AO TO BE SATISFIED THAT THE ASSETS/DOCUMENTS SEIZED DURIN G SEARCH OF ANOTHER PERSON REFLECT UNDISCLOSED INCOME OF AN ASSESSEE BEFORE COMMENCING AN ENQUIRY UNDER SECTION 153C OF THE ACT, IT WOULD BE IMPERMISSIBLE FOR HIM TO COMMENCE SUCH ENQUIRY IF IT IS APPARENT THAT THE DOCUMENTS/ASSETS IN QUESTION HAVE NO BEARING ON THE INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS. 37. AS EXPRESSLY INDICATED U/S 153C OF THE ACT, THE ASSESSMENT OR REASSESSMENT OF INCOME OF A PERSON OTHER THAN A SEARCHED PERSON WOULD PROCEED IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A OF T HE ACT. THE CONCLUDED ASSESSMENTS CANNOT BE INTERFERE D WITH U/S 153A OF THE ACT UNLESS THE INCRIMINATING MATERIAL BELONGING TO THE ASSESSEE HAS BEEN SEIZED. 3.3 LD. A.R. ALSO CONTENDED THAT NO ANY INCRIMINATI NG MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AGAI NST THE ASSESSEE, THEREFORE, AS PER THE PROVISIONS OF I .T. ACT, 14 I.T.A.NO.5116./DEL/2013 NO ADDITION CAN BE MADE ON THE OTHER THAN SEARCHED PERSON. HE RELIED UPON THE DECISION OF HONBLE DEL HI HIGH COURT IN CASE OF CIT VS KABUL CHAWLA IN ITA 707/201 4 DECIDED ON 28 TH AUGUST 2015. 4. LD. D.R. RELIED UPON THE ORDERS OF AUTHORITIES B ELOW. HE SUBMITTED DETAILED WRITTEN SUBMISSIONS CITING VA RIOUS CASE LAWS, WHICH ARE DISTINGUISHABLE ON THE FACTS O F THE PRESENT CASE. 5. AFTER HEARING BOTH THE PARTIES, PERUSING MATERIA L ON RECORD AND CASE LAW CITED BY BOTH THE PARTIES, WE OBSERVE THAT A SEARCH WAS CONDUCTED ON 19.06.2009 ON THE RESIDENTIAL/BUSINESS PREMISES AT D-20, NDSE-II, NEW DELHI AND SATISFACTION NOTES WERE RECORDED ON 18.07 .2011. THE CASE WAS CENTRALIZED ON 1.07.2011. AFTER CAREF UL READING OF THE PROVISIONS OF INCOME TAX ACT AND DEC ISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RR J SECURITIES (SUPRA), IT IS OBSERVED THATS THE HONB LE COURT RECORDED ITS FINDINGS AS UNDER: 15. THE CONTROVERSY IN THIS REGARD IS NO LONGER R ES INTEGRA. A COORDINATE BENCH OF THIS COURT IN SSP AVIATION LTD. V. DEPUTY COMMISSIONER OF INCOME TAX:(2012) 346 ITR 177 HAS HELD THAT: 'IN CASE OF THE SEARCHED PERSON, THE DATE WITH REFERENCE TO WHICH PROCEEDINGS FOR ASSESSMENT OR REASSESSMENT OF ANY ASSESSMENT YEAR WITHIN A PERIOD OF SIX ASSESSMENT YEARS SHALL ABATE, IS THE DATE OF INITIATION OF SEARCH UNDER SECTION L32 OR REQUISITI ON UNDER SECTION 132A. HOWEVER, IN CASE OF OTHER PERSO N .. SUCH DATE WILL BE THE DATE OF RECEIVING THE BOOK S OF 15 I.T.A.NO.5116./DEL/2013 ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIO N BY THE ASSESSING OFFICER HAVING JURISDICTION OVER S UCH OTHER PERSON. IN THE CASE OF OTHER PERSON, 0-E QUES TION OF PENDENCY AND ABATEMENT OF PROCEEDINGS OF ASSESSMENT OR REASSESSMENT TO THE SIX ASSESSMENT YEARS WOULD HAVE TO BE EXAMINED WITH REFERENCE TO SUCH DATE. 5.1 THE CASE IS BARRED BY LIMITATION AS SIX YEAR PE RIOD IS CALCULATED AS UNDER: PERIOD OF ASSESSMENT ASSESSMENT YEAR 1.4.2010 TO 31.3.2011 2011-12 1.4.2009 TO 31.3.2010 2010-11 1.4.2008 TO 31.3.2009 2009-10 1.4.2007 TO 31.3.2008 2008-09 1.4.2006 TO 31.3.2007 2006-07 1.4.2005 TO 31.3.2006 2005-06 5.2 IT IS OBSERVED THAT THE A.O. HAS ISSUED NOTICES ON 18.07.2011 I.E. AFTER EXPIRY OF SIX YEARS AND HENCE THE CASE IS TIME BARRED. 6. RESPECTFULLY FOLLOWING THE JUDGEMENT OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF RRJ SECURI TIES (SUPRA), AND THE FACTS OF THE CASE AND PROVISIONS O F SECTION 153C OF THE ACT DISCUSSED ABOVE AND THE UNDISPUTED FACT THAT NO INCRIMINATING MATERIAL WAS FOUND IN RESPECT OF OTHER THAN SEARCHED PERSON I.E. THE APPELLANT AND FOLLOWING THE PRINCIPLES LAID DOWN IN THE CASE OF K ABUL CHAWLA (SUPRA), TO MEET THE ENDS OF JUSTICE, WE ALL OW BOTH THE GROUNDS OF APPEAL. 16 I.T.A.NO.5116./DEL/2013 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH JUNE, 2016. SD./- SD./- (C. M. GARG) (L. P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:06.06.2016 SP. COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 6/6/2016 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 6/6/ SR. PS/PS 7 FILE SENT TO BENCH CLERK 6/6 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER