M/s. Bina Fashions N Food Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 5921/DEL/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7726 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 17-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 03-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI; RAVI JAIN CIT LD
• Keywords: Document seized; Assessment record; Documents seized; Reassessment proceedings
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 5921/DEL/2014 AY: 20 07-08 M/S BINA FASHIONS N FOOD PVT. LTD., VS DCIT , 53, COMMUNITY CENTRE, CENTRAL CIRCLE-02, NEW FRIENDS COLONY, NEW DELHI NEW DELHI-110065 (PAN: AABCB5582A) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINOD KUMAR BINDAL, CA RESPONDENT BY : SHRI RAVI JAIN, CIT LD. DR & SH. S.L.ANURAGI, D R DATE OF HEARING: 17.02.2016 DATE OF PRONOUNCEMENT: 17.05.2016 ORDER PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST T HE ORDER PASSED BY THE LD. CIT(A)-III, NEW DELHI WHEREIN BY THE IMPUGNED ORDER DATED 7.10.2014, THE ASSESSEES APPEAL FOR AS SESSMENT YEAR 2007-08 HAS BEEN DISMISSED BOTH THE ON THE LEGAL GR OUND AS WELL AS ON MERITS. 2. THE FACTS OF THE CASE, IN BRIEF, ARE THAT A SEAR CH AND SEIZURE OPERATION WAS CARRIED OUT IN THE MODI FAMILY GROUP ON 9.11.2011. DURING THE COURSE OF SEARCH AT THE RESI DENTIAL PREMISES OF SHRI KRISHAN KUMAR MODI AT A-1, MAHARAN I BAGH, I.T.A. NO. 5921/DEL/2014 ASSESSMENT YEAR 2007-08 2 NEW DELHI, A COPY OF THE SALE DEED EXECUTED ON 18.1 2.2007 BY ONE SHRI SANJEEV LAL IN FAVOUR OF M/S BINA FASHION N FOODS (P) LTD. I.E. THE ASSESSEE, THROUGH ITS DIRECTOR MS BIN A MODI, WAS SEIZED AND ANNEXED AS ANNEXURE-1, PAGE NO. 93 TO 10 1 BY PARTY NO. D-1. SUBSEQUENTLY, THE CASE WAS CENTRALISED WI TH CENTRAL CIRCLE-2, NEW DELHI AND THE ASSESSING OFFICER, AFTE R EXAMINING THE SEIZED RECORDS, RECORDED THE SATISFACTION ON 29 .01.2014 THAT THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH BE LONGED TO THE ASSESSEE AND ISSUED NOTICE TO THE ASSESSEE ON 5.2.2 014. IN RESPONSE, THE ASSESSEE FILED LETTER DATED 18.2.2014 REQUESTING TO TREAT THE ORIGINAL RETURN DECLARING NIL INCOME FILE D ON 29.11.2006 AS THE RETURN FILED IN RESPONSE TO NOTICE U/S 153C OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). THE ASSESSMENT WAS COMPLETED U/S 153A/143(3) ON 30.3.2014 AT A TOTAL I NCOME OF RS. 2,53,80,452/-. 3. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD. FIRST APPELLATE AUTHORITY RAISING THE LEGAL GROUND THAT T HE ISSUANCE OF NOTICE U/S 153C OF THE ACT WAS BARRED BY LIMITATION FOR THE YEAR UNDER CONSIDERATION AS ON THE DATE WHEN THE SEIZED DOCUMENTS WERE HANDED OVER TO THE ASSESSING OFFICER OF THE AS SESSEE COMPANY. THE ASSUMPTION OF JURISDICTION U/S 153C O F THE ACT I.T.A. NO. 5921/DEL/2014 ASSESSMENT YEAR 2007-08 3 WAS ALSO CHALLENGED ON THE GROUND THAT NO INCRIMINA TING DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AT T HE TIME OF SEARCH. THE ASSESSMENT WAS ALSO CHALLENGED ON MERI TS. HOWEVER, THE ASSESSEES APPEAL WAS DISMISSED AND NO W THE IMPUGNED ORDER IS BEING CHALLENGED BY THE ASSESSEE BY TAKING AS MANY AS SEVEN GROUNDS BUT THE GROUND GERMANE TO THE WHOLE CONTROVERSY IS GROUND NO. 2 WHICH IS BEING TAKEN UP FIRST FOR ADJUDICATION. GROUND NO. 2 READS AS UNDER:- 2. THE FIRST APPELLATE AUTHORITY ERRED IN LAW AND ON FACTS IN HOLDING THE ISSUANCE OF NOTICE U/S 153C FOR THE AY 2007-08 AS VALID, EVEN WHEN IT WAS BARRED BY TIME LIMITATION AS ON THE DATE WHEN THE SEIZED DOCUMENTS WERE HANDED OVER TO THE APPELLANTS AO AND, THEREFO RE, VOID AB-INITIO; WHICH MUST BE QUASHED. 4. THE LD. AR SUBMITTED THAT THE ASSESSMENT FOR THE YEAR IN APPEAL I.E. ASSESSMENT YEAR 2007-08 WAS BARRED BY L IMITATION SINCE THE SATISFACTION CONTEMPLATED U/S 153C OF THE ACT WAS RECORDED BY THE ASSESSING OFFICER ON 29.01.2014 (TH E RELEVANT ASSESSMENT YEAR BEING 2014-15). ACCORDINGLY, THE D ATE OF SEARCH I.E. 9.11.2011 GETS SUBSTITUTED BY THE DATE OF RECO RDING SATISFACTION I.E. 29.1.2014 AND THE SIX PRECEDING A SSESSMENT YEARS IN THE CASE OF THE ASSESSEE BECOME ASSESSMENT YEARS 2008- 09, 2009-10, 2010-11, 2011-12, 2012-13 AND 2013-14 AND, ACCORDINGLY, ASSESSMENT YEAR 2007-08 GETS EXCLUDED. HE RELIED I.T.A. NO. 5921/DEL/2014 ASSESSMENT YEAR 2007-08 4 ON THE JUDGEMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT-14 VS SHREE JASJIT SINGH (I.T.A. NO. 337/2015) FOR THE PROPOSITION THAT FOR THE THIRD PARTY, SIX PRECEDING YEARS WILL HAVE TO BE RECKONED FROM THE DATE OF RECORDING OF SATISF ACTION NOTE U/S 153C AND NOT FROM THE DATE OF SEARCH. 5. LD. DR SUBMITTED THAT SINCE THE ASSESSING OFFIC ER OF THE SEARCHED PARTY AS WELL AS THE THIRD PARTY WAS THE S AME, THERE WAS NO NEED TO TRANSFER THE RECORDS AND, THEREFORE, THE DATE OF SEARCH WOULD DETERMINE THE PERIOD OF PRECEDING SIX YEARS. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT RECORDS. HON'BLE DELHI HIGH COURT, ON AN E ARLIER OCCASION, HAD EXAMINED THE ISSUE IN THE CASE OF SSP AVIATION LTD. VS DCIT IN WPC 309/2011 WHEREIN, IN ITS JUDGMENT DE LIVERED ON 29.03.2012, THE HON'BLE HIGH COURT DEALT WITH A SIM ILAR ISSUE IN PARAS 13 & 14 AS UNDER:- 13. SECTIONS 153A TO 153D ARE PLACED IN CHAPTER X IV OF THE ACT, WHICH IS TITLED 'PROCEDURE FOR ASSESSMENT' . SECTION 153A PROVIDES FOR THE ASSESSMENT IN CASE OF SEARCH OR REQUISITION. THIS SECTION APPLIES TO A PE RSON IN WHOSE CASE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT ETC. ARE REQUISITIONED UNDER SECTI ON 132A. THE PROCEDURE PRESCRIBED UNDER SECTION 153A I S THAT THE ASSESSING OFFICER SHALL CALL UPON THE ASSE SSEE WHO IS SEARCHED TO FURNISH RETURNS OF INCOME FOR SI X I.T.A. NO. 5921/DEL/2014 ASSESSMENT YEAR 2007-08 5 ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE SEARCH IS CONDUCTED OR REQUISITION IS MADE. THE ASSESSEE, ON RECEIPT OF THE NOTICE FROM THE ASSESSI NG OFFICER, SHALL FURNISH THE RETURNS OF INCOME AND TH EREAFTER THE ASSESSING OFFICER IS EMPOWERED TO ASSESS OR RE- ASSESS THE TOTAL INCOME IN RESPECT OF DIFFERENT ASSESSMENT YEAR FALLING WITHIN SIX ASSESSMENT YEARS . NOW, A QUESTION MAY ARISE AS TO WHAT WOULD HAPPEN T O THE REGULAR RETURNS, IF ANY, FILED BY THE SEARCHED ASSESSEE FOR ANY OF THE SIX ASSESSMENT YEARS WHICH ARE PENDING ON THE DATE ON WHICH THE SEARCH WAS INITIAT ED. THE ANSWER IS GIVEN BY THE SECOND PROVISO TO SECTIO N 153A, WHICH SAYS THAT IF ANY OF THOSE RETURNS IS OR ARE PENDING, THE ASSESSMENT OR REASSESSMENT RELATING TO THOSE RETURNS SHALL ABATE. THE OBJECT OBVIOUSLY IS TO AVOID MULTIPLICITY OF ASSESSMENT OR REASSESSMENT PROCEEDINGS IN RESPECT OF THE SAME ASSESSMENT YEAR OR YEARS. ONCE SECTION 153A IS FOUND TO BE APPLICABLE, THERE WILL BE ONLY ONE ASSESSMENT IN RESPECT OF EACH OF T HE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WH ICH THE SEARCH IS CONDUCTED, IN WHICH THE 'TOTAL INCOME ' OF THE ASSESSEE WILL BE ASSESSED OR REASSESSED. IT SHO ULD BE REMEMBERED THAT ONLY THE PENDING ASSESSMENT OR REASSESSMENT PROCEEDINGS IN RESPECT OF ANY THOSE SI X ASSESSMENT YEARS THAT WILL ABATE; IN CASE THE ASSESSMENT OR REASSESSMENT FOR ANY OF THOSE 6 YEARS HAVE ALREADY BEEN COMPLETED AS ON THE DATE OF SEARC H THEN THERE IS NO QUESTION OF ANY OF THEM ABATING FO R THE SIMPLE REASON THAT WHAT CAN ABATE IS ONLY WHAT REMA INS PENDING. 14. NOW THERE CAN BE A SITUATION WHEN DURING THE SE ARCH CONDUCTED ON ONE PERSON UNDER SECTION 132, SOME DOCUMENTS OR VALUABLE ASSETS OR BOOKS OF ACCOUNT BELONGING TO SOME OTHER PERSON, IN WHOSE CASE THE SEARCH IS NOT CONDUCTED, MAY BE FOUND. IN SUCH CASE , THE ASSESSING OFFICER HAS TO FIRST BE SATISFIED UNDER S ECTION 153C, WHICH PROVIDES FOR THE ASSESSMENT OF INCOME O F ANY OTHER PERSON, I.E., ANY OTHER PERSON WHO IS NOT COVERED BY THE SEARCH, THAT THE BOOKS OF ACCOUNT OR OTHER I.T.A. NO. 5921/DEL/2014 ASSESSMENT YEAR 2007-08 6 VALUABLE ARTICLE OR DOCUMENT BELONGS TO THE OTHER P ERSON (PERSON OTHER THAN THE ONE SEARCHED). HE SHALL HAND OVER THE VALUABLE ARTICLE OR BOOKS OF ACCOUNT OR DOCUMEN T TO THE ASSESSING OFFICER HAVING JURISDICTION OVER THE OTHER PERSON. THEREAFTER, THE ASSESSING OFFICER HAVING JURISDICTION OVER THE OTHER PERSON HAS TO PROCEED A GAINST HIM AND ISSUE NOTICE TO THAT PERSON IN ORDER TO ASS ESS OR REASSESS THE INCOME OF SUCH OTHER PERSON IN THE MAN NER CONTEMPLATED BY THE PROVISIONS OF SECTION 153A. NOW A QUESTION MAY ARISE AS TO THE APPLICABILITY OF THE S ECOND PROVISO TO SECTION 153A IN THE CASE OF THE OTHER PE RSON, IN ORDER TO EXAMINE THE QUESTION OF PENDING PROCEED INGS WHICH HAVE TO ABATE. IN THE CASE OF THE SEARCHED PE RSON, THE DATE WITH REFERENCE TO WHICH THE PROCEEDINGS FO R ASSESSMENT OR REASSESSMENT OF ANY ASSESSMENT YEAR WITHIN THE PERIOD OF THE SIX ASSESSMENT YEARS SHALL ABATE, IS THE DATE OF INITIATION OF THE SEARCH UNDE R SECTION 132 OR THE REQUISITION UNDER SECTION 132A. FOR INSTANCE, IN THE PRESENT CASE, WITH REFERENCE TO TH E PURI GROUP OF COMPANIES, SUCH DATE WILL BE 5.1.2009. HOWEVER, IN THE CASE OF THE OTHER PERSON, WHICH IN THE PRESENT CASE IS THE PETITIONER HEREIN, SUCH DATE WI LL BE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUM ENTS OR ASSETS SEIZED OR REQUISITION BY THE ASSESSING OF FICER HAVING JURISDICTION OVER SUCH OTHER PERSON. IN THE CASE OF THE OTHER PERSON, THE QUESTION OF PENDENCY AND ABATEMENT OF THE PROCEEDINGS OF ASSESSMENT OR REASSESSMENT TO THE SIX ASSESSMENT YEARS WILL BE EXAMINED WITH REFERENCE TO SUCH DATE. 7. THE RATIO OF THIS JUDGMENT HAS BEEN FOLLOWED IN THE CASE OF CIT VS SHREE JASJIT SINGH (SUPRA) ON WHICH THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED. THE HON'BLE DELHI HIGH CO URT HAS ALSO CONSIDERED CIRCULAR DATED 31.3.2014 ISSUED BY THE C BDT IN THE JUDGMENT OF CIT VS SHREE JASJIT SINGH (SUPRA). PAR A 2.5 OF THE SAID CIRCULAR IS BEING REPRODUCED FOR READY REFEREN CE AS UNDER:- I.T.A. NO. 5921/DEL/2014 ASSESSMENT YEAR 2007-08 7 'THE AO OF THE OTHER PERSON ASSUMES JURISDICTION UN DER SECTION 153C WITH THE RECEIPT OF THE RELEVANT SEIZE D MATERIAL FROM THE AO OF THE SEARCHED PERSON. ALSO, A COPY OF THE SATISFACTION RECEIVED FROM THE AO OF TH E SEARCHED PERSON IN THIS REGARD WOULD ENABLE HIM TO PROCEED FURTHER IN THE CASE OF THE OTHER PERSON UND ER SECTION 153C. THOUGH THERE IS NO STATUTORY REQUIREM ENT FOR THE AO OF SUCH OTHER PERSON TO RECORD ANY SATISFACTION/REASON BEFORE ISSUING NOTICE UNDER SEC TION 153C AND PROCEEDING FURTHER, CONSIDERING THE ABOVE ASPECTS, IT IS ADVISABLE FOR MAINTAINING INSTITUTIO NAL MEMORY THAT THE AO RECORDS RECEIPT OF THE SEIZED MATERIAL AND THE SATISFACTION FROM THE AO OF THE SEARCHED PERSON AND SUCH RECORDING/NOTING MAY BE KE PT IN THE ASSESSMENT FOLDER OF SUCH OTHER PERSON. IN C ASE, THE AO OF THE SEARCHED PERSON EXERCISES JURISDICTIO N OVER THE OTHER PERSON ALSO, APPROPRIATE REFERENCING SHOU LD BE MADE IN THE RELEVANT ASSESSMENT RECORDS OF SUCH OTH ER PERSON. 8. THUS, THE CBDT CIRCULAR AND THE RATIO OF THE TW O JUDGEMENTS OF THE HON'BLE DELHI HIGH COURT, AS DISC USSED ABOVE, CLINCH THE ISSUE IN FAVOUR OF THE ASSESSEE AND, ACC ORDINGLY, WE QUASH THE ASSESSMENT FRAMED U/S 153A/143(3) FOR ASS ESSMENT YEAR 2007-08 AS BEING VOID AB INITIO AS BEING BARRED BY LIMITATION. GROUND NO. 2 OF THE ASSESSEES APPEAL IS ALLOWED. ALL OTHER GROUNDS ARE DISMISSED AS HAVING BECOME IN FRUCTUOUS. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. I.T.A. NO. 5921/DEL/2014 ASSESSMENT YEAR 2007-08 8 ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MAY, 2016. SD/- SD/- (S.V. MEHROTRA) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICI AL MEMBER DATED: THE 17TH OF MAY, 2016 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 4. DR, ITAT BY ORDER ASSTT. REGISTRAR