RUSHABH UDAYAN MODI,AHMEDABAD V. THE ITO, WARD-3(3)(1), AHMEDABAD

ITSSA 145/AHD/2023

AI Insights

The case involves Rushabh Udayan Modi, the appellant, who contested an assessment order for the Assessment Year 2011-12, which was based on information allegedly related to on-money transactions in a property scheme. The information was derived from a search operation on third parties, and the AO issued a notice under Section 153C of the Income Tax Act, 1961, to assess the appellant's income for the said year. The appellant challenged the validity of the notice and the subsequent assessment on several grounds, including the issue of limitation and the lack of opportunity for cross-examination of the third party. The Tribunal, referencing a decision by the Hon'ble Apex Court, concluded that the assessment was time-barred and thus beyond the AO's jurisdiction.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 472273 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 31-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Other Referred Cases: Commissioner of Income-tax vs. Jasjit Singh (2023) 155 taxmann.com 155 (SC)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P.S. CHOOUDHRY
• Assessee Lawyers: BIREN SHAH
• Keywords: Set aside; Unexplained investment
• Section: 153C

Judgement Text

" आयकर अपीलीय अिधकरण, अहमदाबाद \u0011ायपीठ “डी“, अहमदाबाद । IN THE INCOME TAX APPELLATE TRIBUNAL “ D ” BENCH, AHMEDABAD BEFORE SHRI KUL BHARAT, VICE PRESIDENT & SMT.ANNAPURNA GUPTA, ACCOUNTANT MEMBER IT(SS)A No.145 /Ahd/2023 Assessment Year : 2011-12 Rushabh Udayan Modi 17, Dhananjay Bungalow Shyamal to Prahaldnagar Road Satellite, Ahmedabad – 380 015 Vs The ITO W#ard-3(3)(1) Ahmedabad – 380 009 (Gujarat) PAN: AECPM 2345 C अपीलाथ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Biren Shah, AR Revenue by : Shri P.S. Chooudhry, CIT-DR सुनवाई की तारीख/Date of Hearing : 30/01/2025 घोषणा की तारीख /Date of Pronouncement: 31/01/2025 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER This appeal filed by the Assessee is directed against the order dated 09/10/2023 passed by the Ld.Commissioner of Income Tax (Appeals)-12, Ahmedabad [hereinafter referred to as “CIT(A)”], for the Assessment Year (AY) 2011-12, arising from the assessment order dated 21/12/2018 passed by the Assessing Officer (hereinafter referred to as “AO”) u/s. 153C r.w.s.153A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). 2. Brief facts relating to the case was that a search was conducted on 04/12/2014 on various premises of Shri Anil Hiralal Shah & Shri Saket J. Shah in the office of the Sarthav Infrastructure Pvt.Ltd. from where hard disc was also seized with Exel Sheet, MS Excel Sheet “CCCCC.xls.”, at the premises of IT(SS)A No.145/Ahd/2023 Rushabh Udayan Modi vs. ITO AY 2011-12 2 the above parties. The assessee Shri Rushabh Udayan Modi is one of the members, who purchased Unit in Abhishree Ecostead Scheme of Sarthav Infrastructure Pvt.Ltd. The hard disc seized from the search persons were stated to allegedly contained information of on-money paid by various investors in the scheme of Abhishree Ecostead Scheme of Sarthav Infrastructure Pvt.Ltd. In the case of the assessee, the on-money stated to be paid amounted to Rs.14 lakhs. Basis this information which was handed over to the AO of the assessee, proceedings for assessing the income of assessee were initiated by issuing notice u/s.153C of the Act and assessment was framed making addition of Rs.14 lakhs on account of on-money paid in cash for investment in property, the source of which remained unexplained. 3. Matter was carried in appeal, where the assessee raised legal grounds challenging the validity of the assessment framed in the present case as also grounds relating to the merits of the case , which were all dismissed by the Ld.CIT(A). Accordingly, the order passed by the AO was confirmed by the Ld.CIT(A). 4. Aggrieved by the same, the assessee has come up in appeal before us by raising following grounds: (Grounds of appeal (Without prejudice to each other) 1. In law and in the facts and circumstances of the appellant's case, the AO has erred in issuing notice u/s 153C of the Act for the year under consideration as such proceeding is barred by limitation. 1.1 In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in holding that notice u/s 153C of the Act is legal notice and not time barred notice ignoring various judicial pronouncements referred before him. IT(SS)A No.145/Ahd/2023 Rushabh Udayan Modi vs. ITO AY 2011-12 3 2. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in upholding addition of alleged unexplained investments based upon documents found during the course of search at third party and such addition was made without allowing cross examination of such party. 3. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has erred in upholding validity of proceedings under Section 153C of the Act even though no satisfaction note of searched person was provided to Appellant and satisfaction note drawn by AO prior to issue of notice was factually incorrect, which makes entire proceedings to be invalid. 4. In law and in the facts and circumstances of the appellant's case, the Ld. CIT(A) has grossly erred in upholding addition of alleged unexplained investment of Rs.14,00,000/- when no such addition is called for. 5. The appellant craves leave to add, alter or amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal. 5. The Ld.Counsel for the assessee, at the outset itself pointed that the contention raised in Ground Nos.1 & 1.1 ,of the notices issued u/s.153C of the Act for the impugned year being barred by limitation, is now settled in favour of the assessee by the decision of Hon’ble Apex Court in the case of Commissioner of Income-tax vs. Jasjit Singh reported in (2023) 155 taxmann.com 155 (SC). The Ld.Counsel for the assessee pointed out that the issue for consideration arose on account of determination of the date of initiation of search as provided in Section 153C of the Act since the section provided that the AO was entitled to assess the income of six years prior to the date of initiation of search. The first proviso to the said section provided that the date of initiation on search was to be construed as reference to the date of receiving the books of accounts or documents or assets seized or requisition by the AO having jurisdiction over the other person. The controversy has arisen, the Ld.Counsel for the assessee pointed out, on account of fact that the ld.CIT(A) has treated the date of initiation of search as the year in which search action was taken was actually undertaken in the IT(SS)A No.145/Ahd/2023 Rushabh Udayan Modi vs. ITO AY 2011-12 4 case of Sarthav Infrastructure Pvt.Ltd. While the case of the assessee was that it ought to have been taken as the year in which documents relating to the assessee were handed over to the assessees AO for initiating action u/s.153C of the Act. This issue, Ld.Counsel for the assessee stated, has been finally settled by the Hon’ble Apex Court in the case of Commissioner of Income- tax vs. Jasjit Singh (supra) categorically holding that in the case of the other person who is to be assessed in terms of section 153C r.w.s.153A of the Act, the period for which they are required to file their returns/the period of which they are to be assessed/commence only from the date when the material are forwarded to their jurisdictional AOs. Copy of the order was placed before us. Further, the relevant and pertinent dates were pointed out to us from CIT(A)’s order, which are as under: 1. Search Date at the premises of Shri Anil Hiralal Shah & Saket J Shah in office of Sarthav Infrastructure Pvt.Ltd. 04/12/2014 2. Document/Information received by Jurisdictional Assessing Officer of appellant from Central Circle-1(2) 16/03/2018 3. Initiation of proceedings under section 153C of the Act 22/03/2018 In terms of the above data, the Ld.Counsel for the assessee contended that the date of initiation of search in the case of the assessee was to be treated as the date on which the AO of the assessee received material and information from the AO of searched entity which is noted to be 16/03/2018 pertaining to AY 2018-19. The six years prior to this assessment year which as per the prevailing provision of law, the AO was required to assess, ended on AY 2012-13. The impugned assessment year being AY 2011-12, therefore fell IT(SS)A No.145/Ahd/2023 Rushabh Udayan Modi vs. ITO AY 2011-12 5 beyond the period six years which the AO could assess and, therefore, the assessment order passed was beyond jurisdiction. 6. The Ld.DR fairly conceded to the same though he has supported the order of the ld.CIT(A). 7. We have considered the contentions of both the parties. Admittedly, the issue raised before us, as to which date is to be treated as the date of initiation of search for the purposes of determining the six years prior to the date of search for framing assessment u/s.153C r.w.s.153A of the Act now stands settled by the decision of Hon’ble Apex Court in the case of Commissioner of Income-tax vs. Jasjit Singh (supra). The Ld.Counsel for the assessee has pointed out that applying the proposition of law laid down in the said decision, the impugned assessment year, i.e. AY 2011-12 falls outside the six years which the AO in the present case is entitled to assess. The Ld.DR did not controvert the facts of the case, nor was he was able to distinguish the decision relied upon by the Ld.Counsel for the assessee. 7.1. In the light of the same, we have no hesitation in holding that the impugned assessment year for which assessment has been framed in the case of the assessee in terms of section 153C of the Act falls outside the six years prescribed under law for assessment. Therefore, the assessment framed is beyond the jurisdiction of the AO and is not legally sustainable. The order passed by the AO is accordingly set aside as invalid. 8. Ground Nos.1 & 1.1 of assessee’s appeal are allowed. IT(SS)A No.145/Ahd/2023 Rushabh Udayan Modi vs. ITO AY 2011-12 6 9. Since we have set aside the order passed by the AO treating it to be invalidly passed beyond jurisdiction, the remaining grounds raised by the assessee on merits need no adjudication, being merely being academic in nature. 10. Accordingly, the appeal of the assessee is allowed in above terms. Order pronounced in the Court on 31st January, 2025 at Ahmedabad. Sd/- Sd/- ( KUL BHARAT ) VICE PRESIDENT ( ANNAPURNA GUPTA ) ACCOUNTANT MEMBER Ahmedabad, Dated 31/01/2025 टी.सी.नायर, व.िन.स./T.C. NAIR, Sr. PS आदेश की \u0018ितिलिप अ\u001cेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u001e / The Appellant 2. \u0018\u001fथ\u001e / The Respondent. 3. संबंिधत आयकर आयु# / Concerned CIT 4. आयकर आयु# ) अपील ( / The CIT(A-12, Ahmedabad 5. िवभागीय \u0018ितिनिध , अपीलीय अिधकरण आयकर , राजोकट/DR,ITAT, Ahmedabad, 6. गाड( फाईल / Guard file. आदेशानुसार/ BY ORDER, //True Copy//स\u001fािपत \u0018ित // Copy// सहायक पंजीकार (Asstt. Registrar) आयकर अपीलीय अिधकरण, ITAT, Ahmedabad 1. Date of dictation pad attached with the file : 30.1.2025 2. Date on which the typed draft is placed before the Dictating Member. : 30.1.2025 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 31.1.25 7. Date on which the file goes to the Bench Clerk. : 31.1.25 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order : "