The Dy. CIT.,Central Circle-1(3), Ahmedabad V. M/s. Suraj Limited, Ahmedabad

ITSSA 398/AHD/2019

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 4985 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-08-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 05-08-2024
• Assessment Year: 2008-2009
• Appeal Filed On: 20-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DULY
• Keywords: Opportunity of being heard
• Section: 32; 68; 132; 143(3); 153A; 13; 22; 153C; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, AHMEDABAD BEFORE SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER & SHRI NARENDRA PRASAD SINHA, ACCOUNTANT MEMBER आयकर अपील (एसएस) सं./I.T (S S).A. No. 398/Ahd/2019 (िनधा榁रण िनधा榁रणिनधा榁रण िनधा榁रण वष榁 वष榁वष榁 वष榁 / Assess ment Ye ars: 2008-09) De pu ty C o mmi ss io ner o f In co me- tax Ce ntr al C ir cle -1 (3 ), Ah me da bad बनाम बनामबनाम बनाम/ V s . M / s. S ura j Li mi te d “S ura j Ho us e” , Op p .- Us h man pu ra Ga rd e n, Vi dh ya n ag ar S oc iet y, Us h man pu ra, A h me dab ad , Gu jar at - 38 00 09 瀡थायी लेखा सं./जीआइआर सं./P A N / G IR N o . : A A IC S 9 6 9 3 L (Appellant) . . (Respondent) अपीलाथ牸 ओर से /Appellant by : Dr. Darsi Suman Ratnam, CIT. DR 灹瀄यथ牸 क琉 ओर से/Respondent by : Shri Jignesh Parikh, AR D a t e o f H e a r i n g 06/08/2024 D a t e o f P r o n o u n c e m e n t 14/08/2024 O R D E R PER SHRI NARENDRA PRASAD SINHA, AM: This appeal is filed b y the Revenue against the order of the Co mmissioner of Inco me Tax (Appeals)-11, Ah me dabad, (in short ‘the CI T(A) ’) dated 18.06.2019 for the Assessment Year 2008-09. 2. The brief f acts of the case are that a search under Se ction 132 of the Act was ca rried out i n Suraj Group of cases on 18.12.2013. Cert ain incri minating documents belonging to the IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 2 – assessee was found during the course of search p roceeding. Therefore, the AO initiated proceeding under Section 153C of the Act against the as sessee for the A.Y. 2008-09 by issuing notice under Section 153C of the Act on 11.01.2016. In response, the assessee had filed e-return on 20.01.2016 declaring Nil income. The assess ment was co mpleted under Section 143(3) r.w.s. 153C of the Act on 29.0 3.2016 at total inco me of Rs.11.06 C rores. 3. Aggrieved with the order of the AO, the assessee had filed an appeal before the First Appellate Authority, which was decided by the Ld. CI T(A) vide the i mpugned order. The Ld. CIT( A) had deleted the addition of Rs.11 Crore in respect of share application mone y b y holding that addition was not based on any incri minating material found during the search. 4. Now, the Revenue is in appeal before us. The following grounds have been taken in this appeal: “ 1 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c as e a n d i n l a w , t h e L d . C I T ( A ) h a s e r r e d i n l a w a n d o n f a c t s i n d e le t i n g t h e a d d i t i o n o f s h a r e a p p l i c a t i o n m o n e y o f ₹ 1 1 , 0 0 , 0 0 , 0 0 0 / - o n a c c o u n t o f a d d i t i o n u / s 6 8 o f t h e A c t 2 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c a se a n d i n l a w , t h e L d . C I T ( A ) h a s e r r e d i n l a w a n d o n f a c t s i n d e le t i n g t h e d i s a l l o w a n c e o f 6 , 0 0 , 0 0 0 / - m a d e b y t h e A O o n p u r c h as e a n d s a l e o f s h a r e s t r e a t i n g t h e s a m e a s b o g u s l o s s . 3 . O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c a se a n d i n l a w , t h e L d . C I T ( A ) o u g h t t o h a v e u p h e l d t h e o r d e r o f t he A . O . 4 . I t i s , t h e r e f o r e , p r a y e d t h a t t h e o r d e r o f t h e Ld . C I T ( A ) b e s e t a s i d e a n d t h a t o f t h e A . O . b e r e s t o r e d t o t h e a b o v e e x t e n t . IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 3 – 5. An additional ground was taken b y the Revenue, which is as under: 1 . " O n t h e f a c t s a n d i n t h e c i r c u m s t a n c e s o f t h e c as e a n d i n l a w , t h e L d . C I T ( A ) h a s e r r e d i n l a w a n d o n f a c t s i n h o ld i n g t h a t s u c h a d d i t i o n s m a d e a r e n o t b a s e d o n a n y m a t e r i a l se i z e d d u r i n g t h e c o u r s e o f s e a r c h p r o c e e d i n g s w i t h o u t a p pr e c i a t i n g t h e f a c t t h a t b o o k s o f a c c o u n t s w e r e s e i z e d d u r i n g t h e c o u r s e o f s e a r c h a n d a d d i t i o n w a s m a d e o n l y o n t h e b a s i s of i n c r i m i n a t i n g s e i z e d m a t e r i a l s . " 6. The assessee has raised following two legal grounds vide application under Rule 27 of the ITAT Rules: “ a T h e L a d . A O h a s e r r e d i n l a w a n d o n f a c t s w h i l e f r a m i n g t h e a s s e s s m e n t u / s . 1 4 3 ( 3 ) r . w . s . 1 5 3 C o f t h e A c t o n t he b a s i s o f t h e N o t i c e i s s u e d u / s . 1 5 3 C o f t h e A c t u p o n a l e g a ll y n o n - e x i s t e n t c o m p a n y o n t h e d a t e o f i s s u e o f t h e n o t i c e. I n v i e w o f t h e f a c t s a n d l e g a l p o s i t i o n , t h e i m p u g n e d o r d e r p as s e d u / s . 1 4 3 ( 3 ) r . w . s . 1 5 3 C o f t h e A c t d e s e r v e s t o b e q u a s h e d / c a n c e l l e d b e i n g v o i d - a b - i n i t i o a n d u n s u s t a in a b l e a t l a w . b T h e L d . A O h a s e r r e d i n l a w a n d o n f a c t s w h i l e ma k i n g t h e a d d i t i o n / d i s a l l o w a n c e , i n a b s e n c e o f a n y i n c r i m i n a ti n g m a t e r i a l i n d i c a t i n g a n y u n a c c o u n t e d i n v e s t m e n t b y th e a p p e l l a n t c o m p a n y o r r e l a t i n g t o t h e i n v e s t m e n t m a de b y G a n e s h P l a n t a t i o n s L t d . a s w e l l a s p u r c h a s e a n d s a le o f s h a r e s o f S u r a j S t a i n l e s s L t d . I n v i e w o f t h e s e t t le d l e g a l p o s i t i o n b y t h e v a r i o u s c o u r t s o f l a w t h a t i n 1 5 3 C a s s e s s m e n t p r o c e e d i n g s , a d d i t i o n s c a n n o t b e m a d e u n l e s s t h e y ar e b a s e d o n a n y i n c r i m i n a t i o n m a t e r i a l o r i n q u i r i e s b a s e d o n s u c h m a t e r i a l , t h e i m p u g n e d a d d i t i o n / d i s a l l o w a n c e m a d e by t h e A O i s u n j u s t i f i e d , i l l e g a l a n d h e n c e d e s e r v e s t o b e d el e t e d . ” 7. Dr. Da rsi Su man Ratna m, Ld. C I T.DR and Shri Ji gnesh Parikh, Ld . AR f or the assessee were heard in resp ect of the grounds as taken by the Revenue as well as the grounds raised by the assessee. The matter was heard on 6 t h June, 2024 and reserved IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 4 – for orders. Subsequently, it was noticed by us that proceeding under Section 153C of the Act was initiated in this case on 11.01.2016 for the A.Y. 2008-09. The Hon ’ble Supr eme Court had held in the case of CIT vs . Jasjit Singh, [2023] 155 taxmann.com 155 (SC) that the block period for the proceeding under Section 153C of the Act has t o be co mputed from the date of receipt of books of accounts or docu ments b y the AO of the non-searched person. The Co-ordinate Bench of this Tr ibunal has also taken an identical view in the case of Ushaben Jayantilal Patel vs. I TO in IT(SS)A No. 12/ Ahd/2024 dated 01.07.2024 [authored by one of us ( Accountant Me mber) ]. As the notice under Section 153C of the Act was issued in this case on 11.01.2016, it prima facie transpired that the six year s for which proceeding under Section 153C of the Act could have been initiated in this case were the A.Ys. 2015-16 to 2010-11 only. Thus, the proceeding under Section 153C of the Act initiated for the A.Y. 2008-09 in this case was f ound to be not in order and beyond the per mi ssible period. Therefore, the matter was fixed for clarification on this issue. This matter was heard on 15 t h Jul y, 2024 and thereafter on 6 t h August, 2024. The sub missions filed by the R evenue a nd the assessee in this regard have been taken on record. 8. The issue regarding proceeding under Section 153C of the Act for the A.Y.2008-09, being beyond the per missible period of six years was not raised by the an y of the parties. The assessee IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 5 – also has not taken any specific ground in this regard. Nevertheless, this issue goes to the r oot of jurisdiction of the AO to initiate proceeding u/s 153C of the Act for the A.Y. 2008-09. Therefore, we ar e of the opinion that this issue needs to be adjudicated first before we find it necessar y to tak e up the grounds as raised by the Revenue an d the assessee. 9. The Ld. CI T.DR , Dr. Da rsi Su man Ratna m sub mitted that no such specific ground was taken by the assessee that the proceeding under Section 153C of the Act for A.Y. 2008-09 were beyond the li mitat ion period. He submitted that in the case of Jasjit Singh (supra) as well as in the case of Ushaben Jayantilal Patel (supra), the assessee had taken specific ground challenging the validity of proceeding under Section 153C of the Act for the specific year . Ac cording to the Ld. CI T.DR, in the a bsence of any such specific ground being taken b y the assessee, the Ld. ITAT was not co mpetent to decide this issue by taking suo motto notice. He further sub mitted that in the case of J asjit Singh (supra) as well as Ushaben Jayantilal Patel (supra), the AO of the searched person and the AO of the respective assessee were different and ther e was actual transfer of docu ments pertaining to the assessee from the AO of searc hed person to the AO of other person. In the pr esent case, however, the AO of the searched person and the AO of the other pe rson was the sa me and there was no require me nts of transfer of seized docu ments b elonging / pertaining to the assessee. The issue of notice under Section IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 6 – 153C of the Act in the case of the present assessee was onl y a technical requirement without transfer of the seized documents. Therefore, the fac ts of the present c ase were different fro m the facts of the Jasjit Singh (supra) & Ushaben Jayantilal Patel (supra) and, there fore, the r atio of the said decision cannot be applied to the facts of the present case. According to the Ld. CIT.DR , onl y the date of search nee ds to be applied in the present case to c alculate the block period for initiating proceeding under Section 153C of the Act. He further sub mitted that since the hearing of the pres ent case was concluded on 06.06.2024 and onl y a clarification on specific point was sought by the Ld. Tribunal, the assessee was not entitled to raise an y specific ground on the basis of fresh facts. The Ld. C IT.DR vehe mentl y contended that the judg ment in the case of Jasjit Singh (supra) & Ushaben Jayantilal Patel (supra) was not a pplicable to the facts of the present case. 10. Per contra, Shri Jignesh Parikh, Ld . AR for the asse ssee submitted that it was a settled legal principle that consent can’t confer jurisdiction when the jurisdiction could be created only b y fulfilment of the precedent conditions and he placed reliance in this regard on the decision of the jurisdictional High Court in the case of P V Doshi Vs. CIT (113 IT R 22) (Gujarat). He further submitted that following the decision of the Supre me C ourt in the case of Jasjit Singh (supra) the proceeding u/s 153C couldn’t have been initiated in the case of the assessee for the A.Y. 2008- IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 7 – 09. The Ld. Counsel sub mitted that the issue of jurisdiction goes to the root of the matter and that under the provisions of the Act the Ld. ITAT had powers to examine this issue even if no specific ground was taken by the assessee in this regard. 11. We have given a t houghtful consideration to the issue and deeply pondered over the rival submissions. The contention of the Revenue is tha t the AO of the se arched person and the AO of the other person was the sa me in this case and there was no require ment to transfer the seized docu ments belonging /pertaining to the assessee. There fore, a ccording to the Revenue, only the date of se arch needs to be applied in the present case as the reference point to calculate the block period of six yea rs for initiating proceeding under Section 153C of the Act. As per the sche me of the Act, the year of search is considered as the reference point to deter mine the preceding six yea rs only in respect of the searched person, where the proceeding is initiated u/s 153A of the Act. In c ase of non-searched person, proceeding is initiated u/s 153C of the Act and not u/s 153A of the Act. As no warrant of authorization was i ssued in the name of the assessee, even though the search wa s conducted in the group, we have to find out the reference point for considering the preceding six ye ars in this case, u/s 153C of the Act. 12. As per provision of Section 153C of the Act , if the AO of the searched pers on is satisfied that an y books of a ccounts or IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 8 – documents or asse ts belong or pertain to other than the searched person (other person), then such books of accounts or documents or assets shall be handed over b y th e AO of the searc hed person to the AO of the o ther person. In the present case the AO of the searched person and the AO of t he other person was sa me. Therefore, there was no require ment of actual handing over of the seized documents belonging to the assessee to an y other AO. Nevertheless, in order to assume jur isdiction on the case of the other person it is necessar y for the co mmon AO to record his satisfaction that the seized docu ment pertains/belongs to the other person. Until and unless he records such satisfaction, he can’t assu me the jurisdiction to initiate proceedings u/s 153C of the Act in the c ase of other person. The condition of recording satisfaction note by the AO of the se arched person was , therefore , required to be ma ndatorily co mplie d in this case as well. 13. In the course of hearing, vide o rder sheet note dated 11.09.2023, the Ld. C IT.DR was required to produce the satisfaction note of the AO of the se arched person while handing over the documents found during the search and relating to the assessee, as presc ribed b y la w under Se ction 153C of the Act. The satisfaction note as recorded by the AO of the searched person was not produced by the R e venue and a repl y of the AO [DCI T, C entral Circle-1(3)] dated 13.10.2023 was filed, which is reproduced below: IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 9 – “ 2 . I t i s s u b m i t t e d t h a t i n t h e c a s e o f S u r a j G r o u p o f c a s e s , a s e a r c h a c t i o n u / s 1 3 2 o f t h e A c t w a s c a r r i e d o u t o n 1 8 . 1 2 . 2 0 1 3 M / s . S u r a j L i m i t e d b e i n g o n e o f t h e e n t i t i e s o f t h e g r o up w a s a l s o c o v e r e d i n t h e s e a r c h . D u r i n g t h e c o u r s e o f s e a r c h p r o c e e d in g s , v a r i o u s i n d i s c r i m i n a t i n g d o c u m e n t s b e l o n g i n g t o t h e a s s e s s ee i . e . M / s . S u r a j L i m i t e d w a s f o u n d a n d s e i z e d . A c c o r d i n g l y , t h e c e n tr a l i z a t i o n w a s r e c o m m e n d e d b y t h e I n v e s t i g a t i o n O f f i c e r t o D C I T C en t r a l C i r c l e 1 (3 ) , A h m e d a b a d v i d e D G I T ( I n v ) A h m e d a b a d ' s o r d e r N o. D G I T ( I n v . ) / H Q / A h d / C e n t r - S u r a j G r / 2 0 1 3 - 1 4 d a t e d 0 7 / 03 / 2 0 1 4 . F u r t h e r , i n t h e c e n t r a l i z a t i o n p r o p o s a l i t s e l f , M / s. S u r a j L i m i t e d w a s r e c o m m e n d e d t o b e a s s e s s e d u / s 1 5 3 C o f t h e I n c o me T a x A c t b a s e d o n p o s t s e a r c h f i n d i n g s . T h u s , d e r i v i n g c l e a r c u t s a t i s f a c t i o n d r a w n b y t h e I n v e s t i g a t i o n O f f i c e r , s e i z e d m a t e r i a l a n d b a s e d o n s p e c i f i c r e c o m m e n d a t i o n o f a c t i o n u n d e r s e c t i o n 1 5 3C o f t h e I T A c t p r o c e e d i n g s u / s 1 5 3 C w e r e i n i t i a t e d a s p e r t h e l a w b y i s s u i n g n o t i c e u / s . 1 5 3 C o f t h e I . T . A c t f o l l o w i n g d u e p r o c e d u r e . Sa t i s f a c t i o n d r a w n b y t h e I n v e s t i g a t i o n O f f i c e r , f a c t s n a r r a t e d i n t h e a p p r a i s a l r e p o r t o n s e i z e d m a t e r i a l a n d s p e c i f i c r e c o m m e n d a t i o n s f o r i n i t i a t i o n o f p r o c e e d i n g s u / s 1 5 3 C o f t h e a c t , a r e e n c l o s e d t o t hi s e f f e c t . T h e r e f o r e , t h e A O h a s t a k e n d u e c o g n i z a n c e o f s p e c if i c r e c o m m e n d a t i o n s a s i s e v i d e n t f r o m t h e a d d i t i o n s m ad e i n t h e a s s e s s m e n t o r d e r . T h e A O h a s a l s o a d o p t e d t h e l i n e o f i n v e s t i g a t i o n a s r e c o m m e n d e d b y t h e I n v e s t i g a t i o n O f f i c e r w h i l e pr o c e s s i n g a c t i o n u / s 1 5 3 C o f t h e a c t . H o w e v e r , a s t h e m a t t e r o f a s s e s s m e n t i s v e r y o l d a n d d u e t o p i l i n g o f a s s e s s m e n t r e c o r d s o ne o v e r t h e o t h e r , t h e r e i s a p o s s i b i l i t y o f m i s p l a c e m e n t o f s p e c i f i c f o l d e r / p a g e d e r i v i n g s a t i s f a c t i o n u n d e r s e c t i o n 1 5 3 C o f t h e a c t a s t h e A O o f t h e s e a r c h e d a s s e s s e e a n d t h e A O o v e r M / s S u r a j L i m i t e d w a s o n e a n d t h e s a m e . S u c h n o n a v a i l a b i l i t y o r m i s p l a c e m e n t m a y k i n d l y n o t t o b e c o n s t r u e d a s n o n - d e r i v i n g o f s a t i s f a c t i o n u / s 1 53 C o f t h e a c t 2 . 1 F u r t h e r i t i s h u m b l y s u b m i t t e d t h a t i s s u e s r e l at e d t o M / s S u r a j L i m i t e d v e r y t h o r o u g h l y e l a b o r a t e d i n t h e a p p r a i s a l r e p o r t a r e b i n d i n g o n t h e A s s e s s i n g O f f i c e r o f t h e C e n t r a l C i rc l e a n d t h e A O i s d u t y b o u n d t o f o l l o w t h e s a m e u n l e s s h e / s h e f i n ds a n y d e v i a t i o n b a s e d o n s p e c i f i c i n v e s t i g a t i o n s c a r r i e d o u t . B u t in t h i s c a s e , n o s u c h d e v i a t i o n e v e n , w a s s u g g e s t e d b y t h e A O w h i c h c l e a r l y s h o w s t h a t A O h a d b e e n v e r y m u c h c l e a r a b o u t S a t i s f a c t i o n d r a w n b y t h e I n v e s t i g a t i o n O f f i c e r , f a c t s n a r r a t e d i n t h e a p p r a is a l r e p o r t o n s e i z e d m a t e r i a l a n d s p e c i f i c r e c o m m e n d a t i o n s f o r i ni t i a t i o n o f IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 10 – p r o c e e d i n g s u / s 1 5 3 C o f t h e a c t . T h e r e f o r e , t h e o r de r o f t h e A O m a y k i n d l y b e h e l d v a l i d a n d i n a c c o r d a n c e w i t h l a w . 2 . 2 S t i l l e f f o r t s a r e o n t o t r a c e t h a t s p e c i f i c f o ld e r / p a g e d e r i v i n g s a t i s f a c t i o n u n d e r s e c t i o n 1 5 3 C o f t h e a c t a s t h e AO o f t h e s e a r c h e d a s s e s s e e a n d t h e A O o v e r M / s . S u r a j L i m i t e d w a s o n e a n d t h e s a m e a n d t h e r e i s a p o s s i b i l i t y t h a t i t m i g h t b e t a g g e d t o g e t h e r a t o n e s p e c i f i c f o l d e r k e p t s e p a r a t e l y f o r a c t i o n u / s 1 5 3 C o f t h e a c t o r m a y b e t a g g e d w i t h o t h e r c a s e s o f t h e s a m e g r o u p . ” 14. Even if we accept the contention of the Revenue that t here was no require men t of transfer of sei zed docu ments f rom one AO to another in this case, the proceeding under Section 153C of the Act could have been initiated only a fter re cording of s atisfaction by the AO of the searched person. It has been held by t he Hon’ble Supre me Court in the case of Super Malls ( P.) Ltd. v s. Pr. CIT [2020] 273 Taxman 556 (SC) that before issuing notice under Section 153C of the Act the AO of the searched person must be satisfied that any document seized o r requisitioned belongs to a person other than the searched person. The rec ording of satisfaction by the AO of the search ed person is sine qua non to initiate proceeding u/s 153C of the Act, even in a cas e where the AO of the searche d person and AO of the other person is co mmon. To quote fro m the order of the Hon’ble Supre me Court: 6 . T h i s C o u r t h a d a n o c c a s i o n t o c o n s i d e r t h e s c h e me o f S e c t i o n 1 5 3 C o f t h e A c t a n d t h e c o n d i t i o n s p r e c e d e n t t o b e f u l f i l l e d / c o m p l i e d w i t h b e f o r e i s s u i n g n o t i c e u n d e r S e c t i o n 1 5 3 C o f t h e A c t i n t h e c a s e o f C a l c u t t a K n i t w e a r s (s u p r a ) as w e l l a s b y t h e D e l h i H i g h C o u r t i n t h e c a s e o f P e p s i F o o d P v t . L t d. ( s u p r a ) . A s h e l d , b e f o r e i s s u i n g n o t i c e u n d e r S e c t i o n 1 5 3 C o f th e A c t , t h e A s s e s s i n g O f f i c e r o f t h e s e a r c h e d p e r s o n m u s t b e “ sa t i s f i e d ” t h a t , IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 11 – i n t e r a l i a , a n y d o c u m e n t s e i z e d o r r e q u i s i t i o n e d “ be l o n g s t o ” a p e r s o n o t h e r t h a n t h e s e a r c h e d p e r s o n ... . 6 . 1 ... . A t t h e s a m e t i m e , t h e s a t i s f a c t i o n n o t e b y t he A s s e s s i n g O f f i c e r o f t h e s e a r c h e d p e r s o n t h a t t h e d o c u m e n t s et c . s o s e i z e d d u r i n g t h e s e a r c h a n d s e i z u r e f r o m t h e s e a r c h e d p e rs o n b e l o n g e d t o t h e o t h e r p e r s o n a n d t r a n s m i t t i n g s u c h m a t e r i a l t o t h e A s s e s s i n g O f f i c e r o f t h e o t h e r p e r s o n i s m a n d a t o r y . H o w e v e r , i n t h e c a s e w h e r e t h e A s s e s s i n g O f f i c e r o f t h e s e a r c h e d p e r s o n a n d t h e o t h e r p e r s o n i s t h e s a m e , i t i s s u f f i c i e n t b y t h e A s s e s s in g O f f i c e r t o n o t e i n t h e s a t i s f a c t i o n n o t e t h a t t h e d o c u m e n t s s e i z e d f r o m t h e s e a r c h e d p e r s o n b e l o n g e d t o t h e o t h e r p e r s o n . O n c e t h e n o t e s a y s s o , t h e n t h e r e q u i r e m e n t o f S e c t i o n 1 5 3 C o f t h e A c t i s f u l f i l l e d . I n c a s e , w h e r e t h e A s s e s s i n g O f f i c e r o f t h e s e a r c h e d pe r s o n a n d t h e o t h e r p e r s o n i s t h e s a m e , t h e r e c a n b e o n e s a t i s f a ct i o n n o t e p r e p a r e d b y t h e A s s e s s i n g O f f i c e r , a s h e h i m s e l f i s t h e A s s e s s i n g O f f i c e r o f t h e s e a r c h e d p e r s o n a n d a l s o t h e A s s e s s in g O f f i c e r o f t h e o t h e r p e r s o n . H o w e v e r , a s o b s e r v e d h e r e i n a b o v e , h e m u s t b e c o n s c i o u s a n d s a t i s f i e d t h a t t h e d o c u m e n t s s e i z e d / re c o v e r e d f r o m t h e s e a r c h e d p e r s o n b e l o n g e d t o t h e o t h e r p e r s o n . In s u c h a s i t u a t i o n , t h e s a t i s f a c t i o n n o t e w o u l d b e q u a t h e ot h e r p e r s o n. T h e s e c o n d r e q u i r e m e n t o f t r a n s m i t t i n g t h e d o c u m e n t s s o s e i z e d f r o m t h e s e a r c h e d p e r s o n w o u l d n o t b e t h e r e a s h e h i m s e lf w i l l b e t h e A s s e s s i n g O f f i c e r o f t h e s e a r c h e d p e r s o n a n d t h e o th e r p e r s o n a n d t h e r e f o r e t h e r e i s n o q u e s t i o n o f t r a n s m i t t i n g s u c h s e i z e d d o c u m e n t s t o h i m s e l f . ( E m p h a s i s s u p p l i e d . ) 15. Thus, the recording of satisfaction by the AO of the searched person is a mandatory re quirement for initiation of proceeding under Section 153C of the Act. It is only b y recording the satisfaction that the co mmon AO assu mes the jurisdiction to issue notice u/s 153C of the Act in respect of the other person. Further, it is onl y on the date of reco rding of satisfaction that the AO of the other person will assume the jurisdiction to initiate proceeding under Section 153C of the Act in respect of the other IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 12 – person. Therefore , the sub mission of the Revenue that only the date of search nee ds to be applied to calculate the ti me li mit in the present case, is neither correct nor in accordance with the provision of law as well as the de cision of Hon ’ble Supre me Court in the case of Super Malls (P.) Ltd.(supra). It doesn’t matter whether the assessee is related or unrelated to the searched group. The date o f recording of satisfaction by the AO of the searched person will be the relevant date to initiate the proceeding under Section 153C of the Act and the time li mit of six assessment ye ars has to be co mputed with reference to the date of recording of satisfaction by the AO of the searched person. The seized docu ments pertaining to the other person will be dee med to be tr ansferred to the AO of the other per son on the date of re cording of satisfaction by the co mmon AO. Since, the Revenue has not produced the satisfaction note recorded by the co mmon AO in this case, one can on ly presu me that sa tisfaction was recorded i mmediatel y prior t o the issue of notice under Section 153C of the Act. As pe r standard practi ce of the Depart ment the notice u/s 153C is issued immedia tely after recording of satisfaction. Since the notice un der Sect ion 153C of the Act w as issued on 11.01.2016 in this case, the year in w hich the satisfaction note w as recorded and the d ocu ments w ere deeme d to be transferr ed to the AO of th e present assessee has to be ta ken as the fina ncial year 2015-16 relevant to A.Y. 2016-17. Therefore, the six preceding years for w hich proceeding unde r Section 153C o f the Act could have been IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 13 – validly initiated in this case w ere A.Ys. 2015-16 to 2010-11 only. The p rocee ding under Secti on 153C of the Act for A.Y. 2008-09 as initiated in this case is, therefore, not fou nd w ithin the p er missible l imit of 6 years fro m t he date o f dee med handing over of docu ments by t he AO of the search ed person to the AO of the other person. 16. It will be relevant to r efer to first p roviso of Section 153C of the Act which e xplains the date of initiation of search for the proceedings under Section 153C of the Act as under: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person : The above proviso makes it cr ystal clear that the date of initiation of search as refer red in 2 n d Proviso of Section 153A of the Act shall be construed as reference to the date of receiving the books of accounts or docu ments or assets seized or requisitioned by the AO having jurisdiction over such other person. Thus, the date of receiving of the boo ks of account s by the AO of the other person shall be t reated / dee med as date of searc h and six years preceding t o that year w ill be construe d as th e relevant years for w hich proceedings under Section 153C of the Act can be initiated in re spect of suc h oth er person. IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 14 – 17. The Hon ’ble Delhi Court has categorically held in the case of PCI T vs. Ojjus Medicare (P.) Lt d., [2024] 161 taxmann.com 160 (Delhi) that in case of a search a ssessment underta ken under Section 153C of the Act, the previous year of search would stand substituted by the date or the year in which the books of accounts / docu ments an d assets seized are handed over to the jurisdictional AO of the other person as opposed to the year of search which constitutes the basis for an assessment under Section 153A of the Act. Thus, the bloc k perio d for the proceedings un de r Sec tion 153C of the Act has to be computed fro m t he date of r eceipt of boo ks of accounts or docu ments by the AO of the non-searched perso n. This principle has been upheld by the Hon’ble Supre me Cour t in the case of CI T vs . Jasjit Singh (supra), wherein it was held that in case of other person the period for which they were required to file returns u/s 153C of the Act, commenced only from date when materials were forwarded to their jurisdictional Assessing Officers. The Ap ex Court categorically held that t he proviso to section 153C(1) catere d not merely to question of abatement b ut also w ith regard to date f rom w hich six year period was to be re c ko ned, in respect of whi ch returns were to be filed b y third part y whose pre mises were not searched and in respect of who m specific pr ovision of section 153C was enacted. 18. In view of the above legal position, there is no ambi guity that for the procee dings under Section 153C of the Act , the yea r IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 15 – of search shall be substituted by the year of r eceipt of books or documents b y the AO of the other pe rson and thereafter the period of six years has to be counted backwards f ro m that year. In the instant case, seized documents wer e dee med to be tra nsferred to the co mmon AO o n the date of re cording of satisfaction by the co mmon AO in F.Y. 2015-16 relevant to A.Y. 2016-17. Therefore, the pr oceeding u/s 153C could have be en validly initiated in the case of the assessee for the six years preceding the A.Y. 2016-17 i.e. for the A.Y.20 15-16 to A.Y.2010-11 only. 19. In view of the above facts, we a re of the considered opinion, that the AO had no jurisdiction to initiate proceeding under Section 153C of t he Act for the A.Y. 2008-09. As the issue of jurisdiction goes to the root of the matter the order of the AO passed under Section 153C r.w.s. 1 43(3) of the Act, is found to be be yond jurisdiction and is liable to be quashed. 20. The other contention of the Revenue is that the Tribunal is not e mpowered to adjudicate an issue, which is neither raised b y the Revenue nor by the assessee, an d that the jurisdiction of the Tribunal is necessarily restricted to the subject mat ter of the dispute before the First Appellate Authority. Further that the Tribunal cannot allow the assessee or the Depart ment t o dispute new ite ms or ente rtain new clai ms for the first time nor can it consider such issues on its own. In t his context it will be relevant IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 16 – to refer to the provision of Section 254(1) of the Act which reads as under: “ T h e A p p e l l a t e T r i b u n a l m a y , a f t e r g i v i n g b o t h t h e p a r t i e s t o t h e a p p e a l a n o p p o r t u n i t y o f b e i n g h e a r d , p a s s s u c h o r de r s t h e r e o n a s i t t h i n k s f i t . ” 21. The contention of the Revenue is that what the Tribunal is pri maril y entitled to do, is to deter mine the objections raised by the appellant before it and the word ‘thereon’ li mits the jurisdiction of the Tribunal to the subject matter o f appeal. However, upon pe rusal of the power s of the Appellate Tribunal as enshrined in Section 254(1) of the Act , it can be seen that widest jurisdiction has been conferred on the Tribunal which has been given powers to pass such orders, “as it thinks fit”. Further, Rule 11 of the Inco me Tax ( Appellate Tribunal) Rules, 1963 stipulates as under: 11. The appellant shall not, except by leave of the Tribunal, urge or be heard in support of any ground not set forth in the memorandum of appeal, but the Tribunal, in deciding the appeal, shall not be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal under this rule: Provided that the Tribunal shall not rest its decision on any other ground unless the party who may be affected thereby has had a sufficient opportunity of being heard on that ground. (emphasis supplied) 22. This Rule, in no unequivocal terms, gives power to the Tribunal to not to confine its decision only on the grounds as set forth in the me mo randum of appeal or the grounds as allowed in the course of hearing. This Rule doesn’t circu msc ribe or control IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 17 – the power of the Tribunal to pass the orders in the manner as it thinks fit. A con structive reading of section 254(1) of the Act and Rule-11 of I TAT Rules makes it a mpl y clear that t he ITAT is co mpetent to consider any ground or issue not taken by either of the parties, if the sa me is found relevant to decide the appeal pending before it. 23. It is a mpl y evident fro m the provision of Section 254 of the Act and Rule 11 of ITAT Rules that the power of Trib unal while dealing with the appeal is expressed in the widest possible ter ms. The Tribunal has jurisdiction to go into ever y asp ect of the assessment proce edings before the taxing authorities. The Tribunal also has a jurisdiction to exa mine a question of law which arose fro m the facts as found by the taxing authorities which has a bearing on the tax liability of the assessee. Section 254 of the Act doesn’t put any fetters on the power of the Tribunal to consider an issue which ma y aris e in an y appeal. It was held by the Hon ’ble jurisdictional High Court in the case of Gautam Harilal Gotecha vs. DCIT , [2006] 281 ITR 283 ( Guj) that the Tribunal is final fact finding body in the hierar chy of the appellate jurisdiction under the Act and its order is supposed to reflect not only the facts and contentions of the rival parties before it but also the issues which arise for its consideration and the reasons for deciding the issues one wa y or the other. IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 18 – 24. It was held b y the Hon’ble Gauhati High Court in the case of Assam Co mpany (India) Ltd. v s. C IT, [2002] 256 ITR 423 (Gau) that it was per missible on the part of the Tribunal to entertain a ground beyond those incorporated in the me morandu m of appeal, though the part y raising the said ground had neither appealed before it nor had filed a c ross objection in the appeal filed by the other party. To reproduce fro m the said or der: The Appellate Tribunal Rules framed by the Tribunal in exercise of its power under s. 255(5) are wholly for the purpose of regulating its own procedure and the procedure of the Benches of the Tribunal. The Rules therefore embody the principles of procedure to be followed by the Tribunal and its Benches for the discharge of its functions. The scheme of the Rules read as a whole does not suggest that the Rules in anyway have the effect of curtailing or circumscribing the power, authority and jurisdiction of the Tribunal in dealing with matters at its disposal. No prohibition can be read in the Rules totally precluding the Tribunal from considering any ground beyond those mentioned in the memorandum of appeal filed by a party, whether the assessee or the Department, in the absence of an appeal or cross-objection by the other side projecting the new ground. It is a settled principle of law that procedural law is the handmaid of justice and has to be so interpreted to advance the cause of justice and not to thwart it. It is a solemn duty of the taxing authorities to correctly assess the tax liability of an assessee by duly following the relevant provision of law and, therefore, an inflexible and mechanical adherence to the law of procedure cannot be countenanced and in the process deny an assessee a benefit to which it is otherwise entitled in law. That could not have been the purpose of framing the Appellate Tribunal Rules. There cannot be any estoppel against law. Therefore such a primacy is not to be granted to the rules of procedure so as to wipe off a substantial right otherwise available to the assessee in law. This view is also reinforced by the language of r. 11 which does not require the Tribunal to be confined to the grounds set forth in the memorandum of appeal or taken by leave of the Tribunal provided the party who may be affected thereby had sufficient opportunity of being heard on that ground. Therefore it is permissible on the part of the Tribunal to entertain a ground beyond those incorporated in the memorandum of appeal though the party urging the said IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 19 – ground had neither appealed before it nor had filed a cross-objection in the appeal filed by the other party.... 25. It was held b y the Hon’ble Kerala High Court in the ca se of Common Wealth Trust of India Ltd., [221 ITR 474] that the Tribunal was justified in holding suo-motto that the initiation of the re-assess ment proceeding was barred b y li mitation because such initiation fell under the then S ection 147(b) of the Act and not under the then Section 147(a) of the Act. According to the Court, even though li mitation was not specifically s et up as a defence, a barred proceeding had to be dis missed and such was the mandate of Section 3 of the Limitation Act, 1963. The Court e mphasized that the approach has to be justice- oriented and the relevant provisions of the law of procedure require meaningful appreciation. The relevant portion of the order is reproduced below: 15. It is needless to emphasize the regulatory (sic) principle in regard to the general law of limitation that even though limitation is not specifically set up as a defence, a barred proceeding has to be dismissed and such is the mandate of section 3 of the Limitation Act. ............. 17. Thus, the resume of the legal situation re-emphasise the basic principle that the law of procedure has to be approached, understood and appreciated as a helpmate in the course of the process of administration of justice and never as a situation of obstruction or obstacle in regard thereto. Time and again the approach in regard to this is ringing in the decisions of the Supreme Court that the approach has to be justice- oriented and it is the end of the litigation that should be in sight and in regard thereto if it is found that it would not be in consonance with justice to allow the proceedings to continue, the relevant provisions of the law of procedure require meaningful appreciation in the context. IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 20 – 26. The Hon’ble Supre me court has hel d in the case of C IT vs . S. Nelliappan, [1967] 66 ITR 722 (SC) that in deciding an appeal, the Tribunal was not restricted to the grounds set forth in the me morandu m of appeal or taken b y the leave of th e Tribunal provided the party who is affected t hereby is granted sufficient opportunities of being heard on the ground. 27. In the case of Na tional Thermal Power Co. Ltd. vs . CIT , [1998] 229 ITR 383 (SC) the Hon’ble Supre me Court has held that the power of the tribunal in dealing with the appeals is expressed in widest possible ter ms . The Hon’ble Court further held that the view that the Tribunal was confined only to issues arising out of the appeal before the CIT( A) was too narrow a view of the powers of t he Tribunal. It was categorically h eld b y the Hon’ble Apex cou rt that wher e the Tribunal is only r equired to consider a question of la w arising f ro m the facts which are on record in the asse ss ment proceedings, such question has to be exa mined b y the Tribunal when it i s necessar y to consider that question, in order to correctl y ass ess the tax liability of the assessee. In the present case also, the question of law regarding jurisdiction of the AO to initiate assess ment proceeding u/s 153C of the Act for the A.Y.2008-09 is arising fro m the facts which ar e alread y available on record of the assessment proceedings. Therefore, the question of jurisdiction, which is ne cessar y to correctl y assess the tax liability of t he assessee, is required to be considered and decided by us. IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 21 – 28. In view of the a bove provisions of law and the judicial pronounce ments, we are of the c onsidered opinion that the Tribunal has juris diction to exa min e a question of law which arises fro m the f acts as found b y the authorities below. The Tribunal has the power to exa mine the question of jurisdiction, which goes to the root of the matte r and which doesn’t involve further investigation in facts, and t his power is apparent fro m plain reading of Rule 11 of Appellate Tribunal Rules, 1963. Article 141 of the Constitution of India establishes the binding precedence of judge ments delivered b y the Supre me Court and declares that “the law declared by the Supreme Court shall be binding on all courts within the territory of India.” The law as declared b y the Hon’ble Supre me Co urt in the case of J asjit Singh (supra) is binding and we can ’t shut our e yes to the fa ct that the proceeding initiated u/s 153C of the Act in this case was not in accordance with the law as laid down b y the Hon’bl e Court in that case. After ca refully exa mining the facts as availa ble in the assessment order i tself, we have alre ady held that the AO had no jurisdiction to initiate proceedings under Section 153C of the Act for the A.Y. 2008-09, as it was be yo nd the per missible period of six years f ro m the date of recording of satisfaction of the co mmon AO and dee med handing over of the seized docu ments pertaining /belonging to the assessee. Theref ore, th e assessment order passed u/s 153C of the Act for t he A.Y. 2008-09 is quashed due of the lac k of j urisdiction of the AO to initiate the proceeding u/s 153C for this year. IT(SS)A No.398/Ahd/2019 (DCIT vs. M/s. Suraj Limited) A.Y.– 2008-09 - 22 – 29. Since, the assess ment order is quashed due to AO’s la ck of jurisdiction to initiate proceeding u/s 153C of the Act for the A.Y.2008-09, we do not dee m it necessary to adju dicate the grounds taken by t he Revenue as wel l as b y the assessee. 30. In the result, appeal preferred b y the Revenue is dismi ssed. This Order pronounced on 14/08/2024 Sd/- Sd/- (T.R. SENTHIL KUMAR) (NARENDRA PRASAD SINHA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad; Dated 14/08/2024 S. K. SINHA आदेश आदेशआदेश आदेश क琉 क琉क琉 क琉 灹ितिलिप 灹ितिलिप灹ितिलिप 灹ितिलिप अ灡ेिषत अ灡ेिषतअ灡ेिषत अ灡ेिषत/Copy of the Order forwarded to : 1. अपीलाथ牸 / The Appellant 2. 灹瀄यथ牸 / The Respondent. 3. संबंिधत आयकर आयु猴 / Concerned CIT 4. आयकर आयु猴(अपील) / The CIT(A)- 5. िवभागीय 灹ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड榁 फाईल / Guard file. आदेशानुसार आदेशानुसारआदेशानुसार आदेशानुसार/ BY ORDER, True Copy उप उपउप उप/सहायक सहायकसहायक सहायक पंजीकार पंजीकारपंजीकार पंजीकार (Dy./Asstt. Registrar) आयकर आयकरआयकर आयकर अपीलीय अपीलीयअपीलीय अपीलीय अिधकरण अिधकरणअिधकरण अिधकरण, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद / ITAT, Ahmedabad 1 . D a t e o f d i c t a t i o n o n 0 7 . 0 8 . 2 0 2 4 2 . D a t e o n w h i c h t h e t y p e d d r a f t i s p l a c e d b e f o r e t he D i c t a t i n g M e m b e r 0 7 . 0 8 . 2 0 2 4 3 . D a t e o n w h i c h t h e a p p r o v e d d r a f t c o m e s t o t h e S r .P . S . / P . S . 4 . D a t e o n w h i c h t h e f a i r o r d e r i s p l a c e d b e f o r e t h e D i c t a t i n g M e m b e r f o r p r o n o u n c e m e n t 1 4 . 0 8 . 2 0 2 4 5 . D a t e o n w h i c h t h e f a i r o r d e r c o m e s b a c k t o t h e S r. P . S . / P . S ... 1 4 . 0 8 . 2 0 2 4 6 . D a t e o n w h i c h t h e f i l e g o e s t o t h e B e n c h C l e r k ... 1 4 . 0 8 . 2 0 2 4 7 . D a t e o n w h i c h t h e f i l e g o e s t o t h e H e a d C l e r k ... ... ... .... 8 . T h e d a t e o n w h i c h t h e f i l e g o e s t o t h e A s s t t . R e gi s t r a r f o r s i g n a t u r e o n t h e o r d e r ... ... ... ... ... ... ... ... 9 . D a t e o f D i s p a t c h o f t h e O r d e r ... ... ... Date on which the typed draft is placed before the Dictating Member 19.12.2019Other Member.....................Date on which the approved draft comes to