M/s. Green Range Farms Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5365/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7039 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 10-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 01-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS MEETA SINGH
• Keywords: Capital asset; Search and seizure; Document seized; Initiation of penalty proceedings; Documents seized
• Section: 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C, NEW DELHI BEFORE SHRI P. M. JAGTAP, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIAL MEMBER ITA NO.5365/DEL/2014 ASSESSMENT YEAR : 2010-11 GREEN RANGE FARMS PVT. LTD., A- 35, BRIJ GREEN FARMS, CHATTARPUR, MANDIR ROAD, VILLAGE- SATBARI, NEW DELHI. VS. DCIT, CENTRAL CIRCLE- 17, NEW DELHI. PAN : AAACG6453G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SALIL AGARWAL, ADV. SHRI SHAILESH GUPTA, ADV. DEPARTMENT BY : MRS. MEETA SINGH, CIT-DR DATE OF HEARING : 09-07-2018 DATE OF PRONOUNCEMENT : 13-07-2018 O R D E R PER P. M. JAGTAP, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A)- II, NEW DELHI DATED 14.07.2014. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH IS APPEAL ARE AS FOLLOWS. THE ASSESSEE IS A COMPANY WHICH IS CARRYING ON THE BUSINESS AS BUILDERS AND COLONIZERS. THE RETURN OF INCOME FOR THE YEAR UNDE R CONSIDERATION WAS FILED BY IT ORIGINALLY U/S 139 DECLARING LOSS OF RS.17,21,87 2/-. A SEARCH AND SEIZURE ACTION U/S 132 WAS CONDUCTED IN TINNA GROUP OF CASE S ON 11.11.2010. DURING THE COURSE OF SAID ACTION, CERTAIN DOCUMENTS BELONG ING TO THE ASSESSEE COMPANY 2 ITA NO.5365/DEL/2014 WERE FOUND. A NOTICE U/S 153C ACCORDINGLY WAS ISSU ED BY THE ASSESSING OFFICER ON 19.11.2012 IN REPLY TO WHICH A LETTER WAS FILED BY THE ASSESSEE ON 12.02.2013 STATING THAT THE RETURN ORIGINALLY FILED BY IT U/S 139 MAY BE TREATED AS THE RETURN FILED IN RESPONSE TO NOTICE U/S 153C OF THE I.T. AC T, 1961. AS NOTICED BY THE ASSESSING OFFICER, THE ASSESSEE HAD PURCHASED A LAN D MEASURING 14 BIGHAS AND 11 BISWA VIDE AGREEMENT DATED 31.11.2009 FOR RS.9,0 0,000/- AT VILLAGE ROJKA GUJAR, DISTRICT- SOHNA, HARYANA AND THE SAME WAS SU BSEQUENTLY SOLD ON 17.02.2010 FOR RS.40,92,187/-. SINCE THE CAPITAL G AIN ARISING FROM THE SAID SALE WAS NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE WAS REQUIRED BY THE ASS ESSING OFFICER TO OFFER ITS EXPLANATION IN THIS REGARD. IN REPLY, IT WAS SUBMI TTED BY THE ASSESSEE THAT THE LAND AT VILLAGE ROJKA GUJAR, DISTRICT- SOHNA, HARYA NA WAS NOT A CAPITAL ASSET AS IT WAS AN AGRICULTURAL LAND SITUATED 8 KILOMETERS A WAY FROM THE MUNICIPAL LIMITS OF GURGAON MUNICIPAL CORPORATION. A CERTIFICATE DA TED 12.03.2010 TO THIS EFFECT ISSUED BY THE TEHSILDAR, SOHNA (HARYANA) WAS RELIED UPON BY THE ASSESSEE TO SUPPORT AND SUBSTANTIATE ITS CASE. ON PERUSAL OF T HE RELEVANT SALE DEED, THE ASSESSING OFFICER, HOWEVER, NOTICED THAT THE NATURE AND QUALITY OF LAND SOLD BY THE ASSESSEE WAS DESCRIBED AS GAIR MUMKIN PAHAR T O SHOW THAT THE SAID LAND WAS ROCKY. HE ALSO FOUND THAT THE TYPE OF THE SAID LAND WAS MENTIONED IN THE LAND REVENUE RECORDS AS KADIMI BAJZAR TO SHOW THA T IT WAS A BARREN LAND. HE ALSO MADE ENQUIRY WITH CERTAIN COMPETENT AUTHORITIE S WHICH REVEALED THAT NO 3 ITA NO.5365/DEL/2014 ACTIVITIES SUCH AS PLANTATION OR GRAZING OF ANIMALS WERE PERMISSIBLE ON THE SAID LAND. IN THIS REGARD, RELIANCE WAS PLACED BY THE A SSESSING OFFICER ON CIRCULAR NO.S.O.33/P.A.-2/1900/S.4/70 DATED 11.02.1970 ISSUE D BY THE FORESTS AND ANIMAL HUSBANDRY DEPARTMENT, GOVERNMENT OF HARYANA. HE ALSO RELIED ON THE LETTER DATED 16.03.2011 ISSUED BY TEHSILDAR, SOHNA INFORMING THAT THE LAND AT VILLAGE ROJKA GUJAR, DISTRICT- SOHNA, HARYANA WAS A BARREN LAND AND AS PER THE RECORDS, NO CROPS WERE GROWN ON IT. AFTER DISCUSSI NG ELABORATELY THESE DOCUMENTARY EVIDENCES AS WELL AS OTHER INFORMATION COLLECTED BY HIM, THE ASSESSING OFFICER HELD THAT THE LAND OWNED BY THE A SSESSEE AT VILLAGE ROJKA GUJAR, DISTRICT- SOHNA, HARYANA WAS A BARREN AND RO CKY TERRAIN, WHICH WAS NOT CULTIVABLE AND NO PLANTATION ACTIVITIES WERE ALSO P ERMISSIBLE ON THE SAID LAND. HE HELD THAT THE SAID LAND THUS WAS NOT AN AGRICULT URAL LAND AND IRRESPECTIVE OF THE DISTANCE FROM THE CONCERNED MUNICIPAL CORPORATI ON LIMITS, IT WAS A CAPITAL ASSET WITHIN THE MEANING OF DEFINITION OF SECTION 2 (14) OF THE ACT. HE ACCORDINGLY WORKED OUT THE CAPITAL GAIN ARISING FRO M SALE OF THE SAID LAND AT RS.31,92,187/- AND BROUGHT THE SAME TO TAX IN THE H ANDS OF THE ASSESSEE IN THE ASSESSMENT COMPLETED U/S 153C/143(3) VIDE ORDER DAT ED 28.03.2013. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R U/S 153C/143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A). A DETAILED SUBMISSION WAS MADE ON BEHALF OF THE ASSESSEE BEFOR E THE LD. CIT(A) IN SUPPORT OF ITS CASE THAT THE LAND AT VILLAGE ROJKA GUJAR, D ISTRICT- SOHNA, HARYANA WAS AN 4 ITA NO.5365/DEL/2014 AGRICULTURAL LAND SITUATED OUTSIDE 8 KILOMETERS FRO M THE MUNICIPAL LIMITS OF GURGAON MUNICIPAL CORPORATION AND THE SAME WAS NOT BEING A CAPITAL ASSET, PROFIT ON SALE OF THE SAME WAS NOT CHARGEABLE TO TA X. AFTER CONSIDERING AND DISCUSSING THE SAID SUBMISSIONS MADE BY THE ASSESSE E, THE LD. CIT(A) SUMMARIZED HIS CONCLUSION IN PARAGRAPH 7.18 OF HIS IMPUGNED ORDER WHICH READS AS UNDER :- 7.18. THUS IN VIEW OF THE DISCUSSION ABOVE, THE OR DERS OF THE COMMISSIONER, GURGAON DIVISION AND THE DIVISIONAL COMMISSIONER, G URGAON ESTABLISH BEYOND DOUBT THAT NO AGRICULTURAL OPERATIONS COULD HAVE BEEN PER FORMED ON THE LANDS AT VILLAGE ROJKA GUJAR WHERE OWNERSHIP WAS JOINT AND NOT IDENT IFIABLE AND THE SOIL WAS ROCKY AND BARREN. THEY ALSO REVEAL THAT FRAUD WAS COMMITT ED AND INTERPOLATIONS WERE MADE BY THE LOCAL REVENUE OFFICERS IN THE RECORD OF RIGH TS. HENCE, THE DOCUMENTS OF JAMA BANDI AND GIRDWARI, CITED BY THE APPELLANT, WERE NO T RELIABLE PIECES OF EVIDENCE. THE AUTHORITIES ALSO NOTED THAT THE FRAUD HAD LED TO SU BSEQUENT ACTS, SUCH AS MUTATION, WHICH TOO HAD TO BE 'DELETED'. HENCE, NO CREDENCE C AN BE PLACED ON THE MUTATION DEED FILED BY THE APPELLANT. IN THE ABSENCE OF FEASIBILI TY OF AGRICULTURAL OPERATIONS ON THE LANDS AT VILLAGE ROJKA GUJAR, THE APPELLANT COULD N OT HAVE DERIVED AGRICULTURAL INCOME. SINCE THE LANDS IN QUESTION WERE NOT AGRICU LTURAL, IT CONSTITUTED A CAPITAL ASSET AND THE SURPLUS ARISING ON ACCOUNT OF ITS SAL E WAS CORRECTLY SUBJECTED TO CAPITAL GAINS TAX BY THE AO AT RS 31,92,187. AS A RESULT, G ROUNDS 1 TO 7 OF THE APPEAL ARE DISMISSED. APPEAL AGAINST THE INITIATION OF PENALTY PROCEEDINGS IS PREMATURE AND HENCE GROUND 8 OF THE APPEAL IS ALSO DISMISSED. 4. LD. CIT(A) THUS DID NOT FIND MERIT IN THE SUBMIS SION MADE BY THE ASSESSEE AND CONFIRMED THE ADDITION OF RS.31,92,187 /- MADE BY THE ASSESSING OFFICER TO THE TOTAL INCOME OF THE ASSESSEE ON ACCO UNT OF CAPITAL GAIN. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSES SEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. IN ADDITION TO THE GROUNDS ORIGINALLY RAISED BY THE ASSESSEE IN THIS APPEAL DISPUTING THE ADDITION OF RS.31,92,187/- MADE BY TH E ASSESSING OFFICER AND 5 ITA NO.5365/DEL/2014 CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF CAPITAL G AIN, THE ASSESSEE HAS FILED AN APPLICATION SEEKING ADMISSION OF THE FOLLOWING ADDI TIONAL GROUND :- THAT THE ASSESSMENT ORDER PASSED BY LEARNED ASSESS ING OFFICER IS WITHOUT JURISDICTION AND VOID AB-INITIO AND IS LIABLE TO BE QUASHED, AS PROCEEDINGS INITIATED UNDER SECTION 153C OF THE ACT ARE WITHOUT SATISFYING THE STATUTOR Y CONDITIONS ENVISAGED UNDER THE ACT AND ARE THUS, WITHOUT JURISDICTION. 6. SINCE THE ISSUE RAISED BY THE ASSESSEE IN THE AD DITIONAL GROUND IS PURELY A LEGAL ISSUE AND ALL THE MATERIAL FACTS NECESSARY FO R ADJUDICATION OF THE SAME ARE AVAILABLE ON RECORD, WE HAVE ADMITTED THE SAME. EV EN THE LD. DR HAS NOT RAISED ANY OBJECTION IN THIS REGARD. SINCE THE PRELIMINAR ILY ISSUE RELATING TO THE VALIDITY OF INITIATION OF PROCEEDINGS U/S 153C IS RAISED BY THE ASSESSEE IN THE ADDITIONAL GROUND, WE PROCEED TO TAKE UP THE SAME FIRST FOR CO NSIDERATION AND DECISION. 7. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALTH OUGH THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS REGULARLY FILE D BY THE ASSESSEE U/S 139, NO NOTICE U/S 143(2) WAS ISSUED BY THE ASSESSING OFFIC ER AND EVEN THE PERIOD AVAILABLE FOR ISSUE OF SUCH NOTICE HAD EXPIRED BY T HE TIME THE SATISFACTION CAME TO BE RECORDED BY THE ASSESSING OFFICER AND NOTICE U/S 153C WAS ISSUED TO THE ASSESSEE. HE INVITED OUR ATTENTION TO THE SATISFAC TION NOTE PLACED AT PAGE 12E OF HIS PAPER BOOK AND POINTED OUT THAT THE FOLLOWING T WO DOCUMENTS FOUND AND SEIZED DURING THE COURSE OF SEARCH WERE REFERRED TO AND RELIED UPON BY THE ASSESSING OFFICER TO INITIATE THE PROCEEDINGS U/S 1 53C IN THE CASE OF THE ASSESSEE :- 6 ITA NO.5365/DEL/2014 (I) DOCUMENT SEIZED AS PER PARTY NO. R-1, 17 COPY OF CURRENT ACCOUNT WITH SYNDICATE BANK. (II) DOCUMENT SEIZED AS PER PARTY NO. R-3, A-1, 58 DETAILS OF PROPERTY AT VILLAGE SATVARI CHATTARPUR. 8. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE FIRST SEIZED DOCUMENT WAS A COPY OF CURRENT ACCOUNT OF THE ASSESSEE COMPANY W ITH SYNDICATE BANK AND SINCE THE SAID ACCOUNT WAS DULY DISCLOSED BY THE AS SESSEE COMPANY IN ITS RETURN OF INCOME, THE SAME WAS NOT IN THE NATURE OF INCRIM INATING DOCUMENT. HE CONTENDED THAT THE OTHER SEIZED DOCUMENT CONTAINED THE DETAILS OF PROPERTY OWNED BY THE GROUP COMPANIES INCLUDING THE ASSESSEE COMPANY AND SINCE THE PROPERTY MENTIONED THEREIN WAS DULY DISCLOSED BY TH E ASSESSEE COMPANY, THE SAID DOCUMENT ALSO WAS NOT IN THE NATURE OF ANY INC RIMINATING DOCUMENT. HE INVITED OUR ATTENTION TO THE COPY OF THE SAID SEIZE D DOCUMENTS PLACED AT PAGE 12G AND 12H OF HIS PAPER BOOK AND CONTENDED THAT TH E PROPERTY OF THE ASSESSEE AT VILLAGE ROJKA GUJAR, DISTRICT- SOHNA, HARYANA SO LD DURING THE YEAR UNDER CONSIDERATION DID NOT FIND ANY MENTION IN THE SAID DOCUMENT. HE CONTENDED THAT THERE WAS THUS NOTHING INCRIMINATING IN BOTH THE SE IZED DOCUMENTS RELIED UPON BY THE ASSESSING OFFICER FOR INITIATING THE PROCEED INGS U/S 153C AND EVEN IN THE ASSESSMENT COMPLETED U/S 153C/143(3), THE ASSESSING OFFICER HAS NEITHER REFERRED TO NOR RELIED UPON ANY OF THESE TWO DOCUME NTS. HE CONTENDED THAT THESE TWO SEIZED DOCUMENTS RELIED UPON BY THE ASSES SING OFFICER TO INITIATE THE 7 ITA NO.5365/DEL/2014 PROCEEDINGS U/S 153C MAY BE BELONGING TO THE ASSESS EE BUT THE SAME HAVING NO BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF THE ASSESSEE, THESE DOCUMENTS WERE NOT SUFFICIENT TO VALIDLY INITIATE T HE PROCEEDINGS U/S 153C IN THE CASE OF THE ASSESSEE. IN SUPPORT OF THIS CONTENTIO N, HE RELIED ON THE PROVISIONS OF SUB-SECTION (1) OF SECTION 153C AS WELL AS THE FOLL OWING JUDICIAL PRONOUNCEMENT :- (I) CIT VS. VEERPRABHU MARKETING LTD., 388 ITR 574 (CALCUTTA). (II) CIT VS. RRJ SECURITIES LTD., 380 ITR 612 (DEL HI). (III) CIT VS. SINGHAD TECHNICAL EDUCATION SOCIETY, 397 ITR 344 (SC). (IV) PR.CIT VS. INDEX SECURITIES (P.) LTD., 86 TAX MANN.COM 84 (DELHI). 9. LD. DR, ON THE OTHER HAND, CONTENDED THAT ONLY R EQUIREMENT FOR INITIATING THE PROCEEDINGS U/S 153C IN THE CASE OF A PERSON OT HER THAN THE PERSON REFERRED TO IN SECTION 153A AS PER SECTION 153C(1) IS THAT T HE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED ARE BEL ONGING TO SUCH PERSON. SHE CONTENDED THAT AS PER SPECIFIC PROVISION CONTAINED IN SECTION 153C(1), THERE IS NO REQUIREMENT THAT SUCH BOOKS OF ACCOUNT OR DOCUME NTS ARE IN THE NATURE OF INCRIMINATING DOCUMENTS AND THE CONTENTION OF THE L D. COUNSEL FOR THE ASSESSEE BASED ON SUCH REQUIREMENT IS NOT TENABLE IN VIEW OF SPECIFIC PROVISION CONTAINED IN SECTION 153C(1) OF THE I.T. ACT. SHE INVITED OU R ATTENTION TO THE RELEVANT PORTION OF THE ASSESSMENT ORDER TO SHOW THAT THE AD DITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CAPITAL GAIN WAS BASED ON THE SEIZED MATERIAL ALTHOUGH THE SAME WAS NOT SPECIFICALLY MENTIONED IN THE SATISFAC TION NOTE. SHE CONTENDED 8 ITA NO.5365/DEL/2014 THAT THE CAPITAL GAIN ARISING FROM THE SALE OF ITS LAND DURING THE YEAR UNDER CONSIDERATION WAS CLAIMED TO BE EXEMPT BY THE ASSES SEE ON THE GROUND THAT THE SAME WAS NOT A CAPITAL ASSET. SHE CONTENDED THAT T HIS CLAIM OF THE ASSESSEE, HOWEVER, WAS FOUND WRONG BY THE ASSESSING OFFICER O N THE BASIS OF MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH AS WEL L AS FURTHER ENQUIRY MADE BY HIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE ASSESSMENT MADE BY THE ASSESSING OFFICER U/S 153C BY BRINGING TO TAX T HE CAPITAL GAIN ARISING FROM THE SALE OF THE SAID LAND WAS IN ACCORDANCE WITH TH E RELEVANT PROVISIONS OF LAW INCLUDING SECTION 153C OF THE I.T. ACT. SHE AGAIN REITERATED THAT THE REQUIREMENT OF SECTION 153C TO INITIATE THE PROCEEDINGS U/S 153 C IS SPECIFIC AND LIMITED AND THE WORD INCRIMINATING CANNOT BE READ INTO WHILE INTERPRETING THE PLAIN, SIMPLE AND CLEAR PROVISIONS OF SECTION 153C AS SOUGHT BY T HE LD. COUNSEL FOR THE ASSESSEE. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERVED THAT A SEARCH AND SEIZURE ACTION U/S 132 WAS CONDUCTED IN TINNA GROUP OF CASES ON 11.11. 2010 AND AFTER BEING SATISFIED THAT CERTAIN DOCUMENTS FOUND DURING THE C OURSE OF THE SAID SEARCH WERE BELONGING TO THE ASSESSEE, PROCEEDINGS U/S 153C WER E INITIATED BY THE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE ON 16.11.2012. AS EXPLAINED BY THE LD. COUNSEL FOR THE ASSESSEE, THE PERIOD AVAILABLE FOR ISSUE OF NOTICE U/S 143(2) BY THAT TIME HAD EXPIRED AND THE ASSESSMENT FOR THE YE AR UNDER CONSIDERATION IN THE 9 ITA NO.5365/DEL/2014 CASE OF THE ASSESSEE HAVING FILED HIS RETURN OF INC OME U/S 139 WAS FINALIZED LEAVING A LIMITED SCOPE OF ASSESSMENT U/S 153C OF T HE ACT. 11. A COPY OF SATISFACTION NOTE RECORDED BY THE ASS ESSING OFFICER ON 16.11.2012 IS PLACED ON RECORD BY THE LD. COUNSEL F OR THE ASSESSEE AT PAGE 12E OF THE PAPER BOOK AND PERUSAL OF THE SAME CLEARLY SHOW S THAT THE TWO SEIZED DOCUMENTS WERE RELIED UPON BY THE ASSESSING OFFICER TO INITIATE THE PROCEEDINGS U/S 153C IN THE CASE OF THE ASSESSEE. THE FIRST SE IZED DOCUMENT RELIED UPON BY THE ASSESSING OFFICER WAS A COPY OF THE CURRENT ACC OUNT OF THE ASSESSEE WITH SYNDICATE BANK AND AS SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE, THE SAID ACCOUNT WAS DULY DISCLOSED BY THE ASSESSEE IN HIS R ETURN OF INCOME FILED ORIGINALLY U/S 139. THE SECOND SEIZED DOCUMENT CON TAINED CERTAIN DETAILS OF THE PROPERTIES OWNED BY THE DIFFERENT GROUP COMPANIES I NCLUDING THE PROPERTY OWNED BY THE ASSESSEE COMPANY AT VILLAGE- SATBARI, MEHRAULI, NEW DELHI. THE COPIES OF BOTH THESE SEIZED DOCUMENTS ARE PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE AT PAGE NO.12E TO 12H OF THE PAPER BOOK AND AS RIGHTLY CONTENDED BY HIM, THERE IS NOTHING INCRIMINATING TH AT IS FOUND RECORDED IN THESE DOCUMENTS. EVEN THE LD. DR HAS NOT BEEN ABLE TO CO NTRAVENT THIS POSITION. SHE, HOWEVER, HAS CONTENDED BY RELYING ON THE PROVISIONS OF SUB-SECTION (1) OF SECTION 153C THAT ONLY REQUIREMENT FOR INITIATING P ROCEEDINGS U/S 153C IN THE CASE OF PERSON OTHER THAN THE PERSON REFERRED TO SE CTION 153A IS THAT THE DOCUMENTS SEIZED BELONG TO SUCH PERSON AND THE WORD INCRIMINATING CANNOT BE 10 ITA NO.5365/DEL/2014 READ INTO THE PROVISIONS OF SECTION 153C AS SOUGH T BY THE LD. COUNSEL FOR THE ASSESSEE. 12. IN THE CASE OF CIT VS. RRJ SECURITIES LTD. (SUP RA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE, A SIMILAR ISSUE HAD ARISEN FOR CO NSIDERATION BEFORE THE HONBLE DELHI HIGH COURT. IN THE SAID CASE, THE RECORDS SL IP FOUND DURING THE COURSE OF SEARCH CONDUCTED IN THE CASE OF OTHER PERSON WAS UN DISPUTEDLY BELONGING TO THE ASSESSEE, BUT THE QUESTION THAT AROSE FOR CONSIDERA TION BEFORE THE HONBLE DELHI HIGH COURT WAS WHETHER THE ASSESSING OFFICER OF THE ASSESSEE WAS JUSTIFIED IN TAKING FURTHER STEPS FOR REASSESSING THE INCOME OF THE ASSESSEE IN RESPECT OF THE ASSESSMENT YEARS FOR WHICH ASSESSMENTS WERE CONCLUD ED AND IN RESPECT OF WHICH THE SEIZED DOCUMENTS HAD NOT BEARING. IT WAS HELD BY THE HONBLE DELHI HIGH COURT THAT THE SAME WOULD BE CLEARLY IMPERMISSIBLE AS THE SEIZED MATERIAL NOW AVAILABLE WITH THE ASSESSING OFFICER HAD NO NEXUS W ITH THOSE ASSESSMENTS AND WAS WHOLLY IRRELEVANT FOR THE PURPOSE OF ASSESSING THE INCOME OF THE ASSESSEE FOR THE YEARS IN QUESTION. EXPLAINING FURTHER, IT WAS OBSERVED BY THEIR LORDSHIPS THAT MERELY BECAUSE FOR DOCUMENT BELONGING TO THE A SSESSEE IS FOUND FROM THE POSSESSION OF A PERSON SEARCHED U/S 132 OF THE ACT, IT DOES NOT MEAN THAT THE CONCLUDED ASSESSMENTS OF THE ASSESSEE ARE NECESSARI LY TO BE REOPENED U/S 153C OF THE ACT. IT WAS HELD THAT THE CONCLUDED ASSESSM ENT CANNOT BE INTERFERED WITH MECHANICALLY AND SOLELY FOR THE REASON THAT A DOCUM ENT BELONGING TO THE ASSESSEE, WHICH HAS NO BEARING ON THE ASSESSMENTS O F THE ASSESSEE FOR THE YEARS 11 ITA NO.5365/DEL/2014 PRECEDING THE SEARCH, WAS SEIZED FROM THE POSSESSIO N OF SEARCHED PERSONS. IT WAS HELD THAT WHEN THE DOCUMENTS SEIZED HAD NO RELE VANCE OR BEARING ON THE INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS AND COULD NOT POSSIBLY REFLECT ANY UNDISCLOSED INCOME, NO INVESTIGATION WA S NECESSARY AND THE PROVISIONS OF SECTION 153C, WHICH ARE TO ENABLE AN INVESTIGATION IN RESPECT OF THE SEIZED ASSET, COULD NOT BE RESORTED TO. 13. BY RELYING ON THE PROVISIONS OF SECTION 153C(1) AS APPLICABLE IN THE PRESENT CASE, LD. DR HAS CONTENDED THAT THE LIMITED REQUIREMENT FOR INITIATING PROCEEDINGS U/S 153C IN CASE OF A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A IS ONLY THAT THE ASSESSING OFFICER WAS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS SEIZED BELONG TO SUCH PERSON A ND SUCH DOCUMENTS ARE HANDED OVER BY HIM TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. THE RELEVANT PROVISIONS OF SECTION 153C(1) AS PREVALENT AT THE RELEVANT TIME READ AS UNDER :- NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHEN THE ASSESSIN G OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. 14. THE PROVISIONS OF SECTION 153C AS EXTRACTED ABO VE HAVE BEEN SUBSEQUENTLY AMENDED BY THE FINANCE ACT, 2015 W.E.F . 01.06.2015 AND THE PROVISIONS SO AMENDED READ AS UNDER :- ASSESSMENT OF INCOME OF ANY OTHER PERSON. 12 ITA NO.5365/DEL/2014 153C. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHER E THE ASSESSING OFFICER IS SATISFIED THAT, (A) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABL E ARTICLE OR THING, SEIZED OR REQUISITIONED, BELONGS TO; OR (B) ANY BOOKS OF ACCOUNT OR DOCUMENTS, SEIZED OR R EQUISITIONED, PERTAINS OR PERTAIN TO, OR ANY INFORMATION CONTAINED THEREIN, R ELATES TO, A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTI ON 153A, THEN, THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS, SEIZED OR REQUISITIONED SHA LL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NO TICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH THE P ROVISIONS OF SECTION 153A, IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF AC COUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATIO N OF THE TOTAL INCOME OF SUCH OTHER PERSON [FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECED ING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED O R REQUISITION IS MADE AND] FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SU B-SECTION (1) OF SECTION 153A : PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE T O THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITI ON UNDER SECTION 132A IN THE SECOND PROVISO TO SUB-SECTION (1) OF SECTION 153A S HALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUM ENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURIS DICTION OVER SUCH OTHER PERSON : PROVIDED FURTHER THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY I T AND PUBLISHED IN THE OFFICIAL GAZETTE, SPECIFY THE CLASS OR CLASS ES OF CASES IN RESPECT OF SUCH OTHER PERSON, IN WHICH THE ASSESSING OFFICER SHALL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INCOME FOR SIX A SSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVI OUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE [AND FOR THE RELEV ANT ASSESSMENT YEAR OR YEARS AS REFERRED TO IN SUB-SECTION (1) OF SECTION 153A] EXC EPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT HAS ABATED. 15. A COMPARATIVE READING OF THE PRE-AMENDED AND AM ENDED PROVISIONS OF SECTION 153C CLEARLY SHOWS THAT THE REQUIREMENT TO INITIATE PROCEEDINGS U/S 153C IN CASE OF A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A AS PER THE PRE-AMENDED PROVISIONS WAS ONLY THAT THE BOOKS OF A CCOUNT OR DOCUMENTS SEIZED BELONG TO SUCH PERSON AND THE SAME ARE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. THE AM ENDED PROVISIONS OF SECTION 153A, HOWEVER, HAVE MADE A MATERIAL CHANGE IN THIS REQUIREMENT INASMUCH AS 13 ITA NO.5365/DEL/2014 IN ADDITION TO THE SATISFACTION OF THE ASSESSING OF FICER HAVING JURISDICTION OVER A SEARCHED PERSON ABOUT ANY BOOKS OF ACCOUNT OR DOCUM ENTS SEIZED BEING PERTAINED TO ANY OTHER PERSON OR ANY INFORMATION CO NTAINED THEREIN BEING RELATED TO SUCH PERSON AND HANDING OVER OF SUCH BOOKS OF AC COUNT OR DOCUMENTS SEIZED TO THE ASSESSING OFFICER HAVING JURISDICTION OVER S UCH OTHER PERSON, THERE IS AN ADDITIONAL REQUIREMENT THAT THE ASSESSING OFFICER H AVING JURISDICTION OVER SUCH OTHER PERSON SHALL PROCEED AGAINST SUCH OTHER PERSO N IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A ONLY IF HE IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS SEIZED HAVE A BEARING ON THE DETERMINATIO N OF THE TOTAL INCOME OF SUCH OTHER PERSON. 16. IT IS RELEVANT TO NOTE HERE THAT IN THE CASE OF RRJ SECURITIES LTD. (SUPRA) CITED BY THE LD. COUNSEL FOR THE ASSESSEE AND DISCU SSED ON DETAIL IN THE FORGOING PORTION OF THIS ORDER, THE ASSESSMENT YEARS INVOLVE D WERE 2003-04 TO 2008-09 AND THE NOTICES U/S 153C WERE ISSUED TO THE ASSESSE E ON 08.09.2010 AND WHILE DECIDING THE ISSUE RELATING TO THE VALIDITY OF INIT IATION OF PROCEEDINGS U/S 153C, THE HONBLE DELHI HIGH COURT AFTER TAKING NOTE OF T HE AMENDMENT MADE IN THE PROVISIONS OF SECTION 153C W.E.F. 01.06.2015 HELD T HAT IF THE DOCUMENTS SEIZED BELONGING TO THE ASSESSEE HAD NO RELEVANCE AND BEAR ING ON THE INCOME OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEARS AND COUL D NOT POSSIBLY REFLECT ANY UNDISCLOSED INCOME, THE PROVISIONS OF SECTION 153C COULD NOT BE RESORTED TO AND 14 ITA NO.5365/DEL/2014 THE ASSESSING OFFICER HAD NO JURISDICTION TO MAKE R EASSESSMENT U/S 153C OF THE ACT. 17. IN THE CASE OF PR.CIT VS. INDEX SECURITIES (P.) LTD., 86 TAXMANN.COM 84 CITED BY THE LD. COUNSEL FOR THE ASSESSEE, A SIMILA R ISSUE RELATING TO VALIDITY OF JURISDICTION ASSUMED BY THE ASSESSING OFFICER U/S 1 53C HAD COME UP FOR CONSIDERATION BEFORE THE HONBLE DELHI HIGH COURT A ND IT WAS HELD THAT BY THEIR LORDSHIPS BY RELYING ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SINHGAD TECHNICAL EDUCATION SOCIETY (SUPRA) AS W ELL AS THEIR OWN DECISION IN THE CASE OF RRJ SECURITIES (SUPRA) AND ARN INFRASTR UCTURE INDIA LTD. VS. CIT, 394 ITR 569 THAT IN ORDER TO JUSTIFY THE ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT, THE DOCUMENTS SEIZED MUST BE INCRIMINATING . IN THE SAID CASE, IT WAS CONTENDED LIKE IN THE PRESENT CASE ON BEHALF OF THE REVENUE THAT THE REQUIREMENT OF HAVING INCRIMINATING MATERIAL FOUND DURING THE C OURSE OF SEARCH WAS TO BE MET ONLY DURING THE ASSESSMENT AND NOT FOR INITIATI ON OF PROCEEDINGS U/S 153C. THE HONBLE DELHI HIGH COURT, HOWEVER, FOUND THIS C ONTENTION RAISED ON BEHALF OF THE REVENUE TO BE FUTILE BY OBSERVING THAT THE S ATISFACTION NOTE FORMS THE BASIS OF INITIATING THE PROCEEDINGS U/S 153C OF THE ACT. IN THE SAID CASE, TWO SEIZED DOCUMENTS WERE REFERRED TO IN THE SATISFACTI ON NOTE AND SINCE THE ASSESSING OFFICER HAD FINALIZED THE ASSESSMENT WITH OUT MAKING ANY ADDITION ON THE BASIS OF THE SAID DOCUMENTS, IT WAS HELD BY THE HONBLE DELHI HIGH COURT THAT THE SAID DOCUMENTS COULD NOT BE SAID TO BE INC RIMINATING AND CONSEQUENTLY 15 ITA NO.5365/DEL/2014 THE ESSENTIAL REQUIREMENT FOR ASSUMPTION OF JURISDI CTION U/S 153C WAS NOT MET. IT IS PERTINENT TO NOTE HERE THAT THE ASSESSMENT YE ARS INVOLVED IN THE CASE OF INDEX SECURITIES (P.) LTD. (SUPRA) WERE 2007-08 TO 2011-12 AND THE NOTICES U/S 153C WERE ISSUED ON 13.02.2013. 18. AS ALREADY DISCUSSED, BOTH THE SEIZED DOCUMENTS BELONGING TO THE ASSESSEE IN THE PRESENT CASE AS RELIED UPON BY THE ASSESSING OFFICER IN THE SATISFACTION NOTE WERE NOT HAVING ANY BEARING ON TH E DETERMINATION OF THE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERA TION. AS A MATTER OF FACT, NOT ONLY NO ADDITION ON THE BASIS OF THE SAID DOCUMENTS WAS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT COMPLETED U/S 153C/143(3) , BUT EVEN THERE WAS NO REFERENCE WHATSOEVER TO THE SAID DOCUMENTS IN THE S AID ASSESSMENT. IF THIS UNDISPUTED FACTUAL POSITION IS CONSIDERED IN THE LI GHT OF THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. RRJ SECURITIES LTD. (SUPRA) AND PR.CIT VS. INDEX SECURITIES (P.) LTD. (SUPRA), WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE JURISD ICTIONAL REQUIREMENT FOR INITIATING PROCEEDINGS U/S 153C IN THE CASE OF THE ASSESSEE WAS NOT SATISFIED. THE INITIATION OF PROCEEDINGS U/S 153C IN THE CASE OF THE ASSESSEE THUS WAS BAD IN LAW AND THE ASSESSMENT MADE BY THE ASSESSING OFF ICER U/S 153C/143(3) IN PURSUANCE THEREOF IS LIABLE TO BE CANCELLED BEING I NVALID. WE ORDER ACCORDINGLY AND ALLOW THE ADDITIONAL GROUND RAISED BY THE ASSES SEE. 16 ITA NO.5365/DEL/2014 19. AS A RESULT OF DECISION RENDERED BY US ON THE P RELIMINARILY ISSUE RAISED BY THE ASSESSEE IN THE ADDITIONAL GROUND CANCELLING TH E ASSESSMENT MADE BY THE ASSESSING OFFICER U/S 153C/143(3), ALL THE GROUNDS ORIGINALLY RAISED BY THE ASSESSEE IN THIS APPEAL DISPUTING THE ADDITION MADE THEREIN ON ACCOUNT OF CAPITAL GAIN ON MERIT HAVE BECOME INFRUCTUOUS AND WE DO NOT DEEM IT NECESSARY OR EXPEDIENT TO DECIDE THE SAME. 20. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 13 TH DAY OF JULY, 2018. SD/- SD/- (SUCHITRA KAMBLE) (P. M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13-07-2018. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI