M/s. Savitribai Phule Shikshan Prasarak Mandal, Solapur V. Deputy Commissioner of Income-tax, Central Circle -2 (2), Pune

ITSSA 23/PUN/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3403 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 4 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-07-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-07-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 10-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Document seized; Documents seized
• Section: 132; 69C; 153A; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER IT(SS)A No.23/PUN/2019 निर्धारण वषा / Assessment Year : 2013-14 M/s. Savitribai Phule Shikshan Prasarak Mandal, Kamlapur, Taluka Sangola, District Solapur - 413307 PAN : AAFTS0635J Vs. DCIT, Central Circle 2(2), Pune Appellant Respondent आदेश / ORDER PER S.S. GODARA, JM : This assessee‟s appeal for AY 2013-14 arises against the CIT(A)-12, Pune‟s order dated 17-01-2019 passed in case No.PN/CIT(A)-12/10322/2016-17, in proceedings under Section 143(3) r.w.s. 153A of the Income Tax Act, 1961, in short „the Act‟. Heard both the parties. Case file perused. Assessee by Shri Suhas Bora Revenue by Shri Rajarshi Dwivedy Date of hearing 08-07-2022 Date of pronouncement 27-07-2022 IT(SS)A No.23/PUN/2019 M/s. Savitribai Phule Shikshan Prasarak Mandal 2 2. We advert to the assessee‟s first and foremost grievance challenging validity of the impugned section 153C proceedings for want of a proper satisfaction. There is hardly any denial to the fact that the department had carried out its search in issue dated 01.10.2013. Learned Assessing Officer appears to have initiated the impugned section 153C proceedings thereafter in light of his satisfaction note prepared on 13.01.2016 that the corresponding seized material in fact “pertains to” the assessee herein and thus had a “bearing” on its undisclosed income. 3. Learned departmental representative vehemently argued that the lower authorities have rightly initiated and framed section 153C assessment in issue in assessee‟s case in light of the overwhelming incriminating evidence in the nature of seized documents found at the searched party‟s premises. He could hardly rebut the fact that the Assessing Officer‟s clinching statutory expressions employed herein i.e. “pertains to” and has a bearing came to be introduced in the Act vide Finance Act, 2015 w.e.f. 01.06.2015 having prospective operation only whereas we IT(SS)A No.23/PUN/2019 M/s. Savitribai Phule Shikshan Prasarak Mandal 3 are concerned with the search carried out on 01.10.2013. Faced with this situation, we note that hon‟ble jurisdictional high court‟s decision in Income Tax Appeal No.83/2014 CIT vs. M/s. Arpit Land Pvt. Ltd., dated 07.02.2017 has decided the very issue of validity of 153C assessment against the department and in taxpayer‟s favour as under: “3. The undisputed facts before us are that in search and seizure action under Section 132 of the Act was carried out in case of Jay Corporation group, its employees and close associates who were involved in the process of acquiring land. Mr.Dilip Dherai was managing and handling land acquisition on behalf of Jay Corporation group. During the course of search, certain documents were found in possession of Mr.Dilip Dherai on the basis of which the Assessing Officer after recording satisfaction under Section 153C of the Act proceeded to initiate proceedings in respect of both respondents - assessees before us. 4. The Tribunal by the impugned order found that the documents seized from possession of Mr.Dilip Dherai did not belong to the assessee. Consequently it held that the Assessing Officer did not have jurisdiction to initiate proceedings under Section 153C of the Act, as at the relevant time jurisdiction of Assessing Officer to proceed consequent to the search is only when money, bullion, jewellery or other valuable article or thing or books of accounts or documents seized or requisitioned belongs or belonged to a person other than the person who has been searched, then the Assessing Officer having jurisdiction over such person on being handed over seized document etc can proceed against such other person by recording satisfaction and issuing a notice in accordance with the provisions of Section 153A of the Act. The impugned order of the Tribunal records the fact that the documents seized from the possession of Mr.Dilip Dherai do not belong to any of two respondents - assessees before us, consequently, the Assessing Officer did not have jurisdiction under Section 153C of the Act to issue notice to the respondents - assessees. Consequently, the Tribunal also held that satisfaction recorded by the Assessing Officer before initiating assessment proceedings in respect IT(SS)A No.23/PUN/2019 M/s. Savitribai Phule Shikshan Prasarak Mandal 4 of two respondents - assessees before us were also not sustainable. In the above view, the impugned order of the Tribunal held that the Assessing Officer did not have jurisdiction to initiate proceedings under Section 153C of the Act on the two respondents - assessee's before us. 5. The grievance of the Revenue before us is that the respondent – assessees and Mr. Dilip Dherai are all hand in glove workings in tandem to acquire land. Therefore, in the above facts the impugned notice under Section 153C of the Act and also satisfaction note recorded by the Assessing Officer cannot be found fault with. Thus the impugned order of the Tribunal calls for interference and these appeals be admitted. 6. We note that the terms of Section 153C of the Act at the relevant time i.e. prior to 1 st June, 2015 the proceedings under Section 153C of the Act could only be initiated/proceeded against a party - assessee if the document seized during the search and seizure proceedings of another person belonged to the party - assessee concerned. The impugned order records a finding of fact that the seized documents which formed the basis of initiation of proceedings against the respondent assessees do not belong to it. This finding of fact has not been shown to us to be incorrect. Further, the impugned order placed reliance upon a decision of Gujarat High Court in Vijaybhai Chandrani vs. ACTT 333 ITR Page 436 which records that the condition precedent for issuing notice under Section 153C of the Act is that the document found during search proceedings should belong to assessee to whom 'notice is issued under Section 153C of the Act. It was fairly pointed out to us by Mr. Mistry, the learned Senior Counsel for the respondent - assessee that the above decision was reversed by the Supreme Court in CIT vs. Vijaybhai N. Chandrani (2013) 357 ITR 713. However, we find that the Apex Court reversed the view of Gujarat High Court on the ground htat efficacious alternative remedy was available to the petitioner to raise its objections before the authorities under the Act. Therefore, the Gujarat High Court should not have exercised its extra ordinary writ jurisdiction to entertain the petition. However, the Apex Court also clarified that it was not expressing any opinion of the correctness or otherwise of construction placed by the High Court on Section 153C of the Act. The Revenue has not pointed out any reason why the construction put on Section 153C of the Act by Gujarat High Court is not correct/appropriate. We find that in any case our Court has also taken a similar view in CIT vs. Sinhgad Technical Education Society (2015) 378 ITR 84 and refused to entertain Revenue's appeal. IT(SS)A No.23/PUN/2019 M/s. Savitribai Phule Shikshan Prasarak Mandal 5 7. The grievance of the Revenue as submitted by Mr.Kotangale is a submission made on the basis of suspicion and not on the basis of any evidence on record which would indicate that the respondent - assessee and persons searched were all part of the same group. Be that as it may, the requirement of Section 153C of the Act cannot be ignored at the alter of suspicion. The Revenue has to strictly comply with Section 153C of the Act. We are of the view that non satisfaction of the condition precedent viz. the seized document must belong to the respondent – assessee is a jurisdictional issue and non satisfaction thereof would make the entire proceedings taken thereunder null and void. The issue of Section 69C of the Act can only arise for consideration if the proceedings under Section 153C of the Act are upheld. Therefore, in the present facts, the issue of Section 69C of the Act is academic.” 4. We adopt the foregoing detailed discussion mutatis mutandis to quash the impugned section 153C assessment since not based on a proper satisfaction recorded under the provisions of the Act. All other pleadings on merits stand rendered academic. 5. This assessee‟s appeal is allowed in above terms. Order pronounced in the Open Court on 27 th July, 2022. Sd/- Sd/- (DIPAK P. RIPOTE) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER प ु णे Pune; ददिधांक Dated : 27 th July, 2022 GCVSR IT(SS)A No.23/PUN/2019 M/s. Savitribai Phule Shikshan Prasarak Mandal 6 आदेश की प्रतिलिपि अग्रेपिि/Copy of the Order is forwarded to: 1. अपीऱधर्थी / The Appellant; 2. प्रत्यर्थी / The Respondent; 3. The CIT(A)-12, Pune 4. 5. The Pr.CIT-Central, Pune विभागीय प्रविविवि, आयकर अपीलीय अविकरण, पुणे “B” / DR „B‟, ITAT, Pune 6. गार्ड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 14-07-2022 Sr.PS 2. Draft placed before author 27-07-2022 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.